BHRM 230: HUMAN RESOURCE MANAGEMENT

This course is intended for people who are undertaking their Bachelor's studies in Commerce.
You do not need any prior knowledge of the course except that you must have been admitted
to undertake the Bachelors programme in Commerce. You are expected to complete the course
in 45 hours within a period of one semester.
Upon completion of this Course you should be able to: 
i. Explain the nature and purpose of human resource management.
ii. Describe human resource management concepts, theories and process.
iii. Describe human resource management methods and techniques
Assignments/Activities are provided at the end of each topic.
Self-assessments are provided in order to aid your understanding of the topic and course
content. While they may not be graded, you are strongly advised to attempt them whenever
they are available in a topic.

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 TOPIC ONE
INTRODUCTION
Welcome to Topic One. Human Resource Management (HRM) views employees as important
resources or assets of an organisation. Despite all the emerging new technologies of
production, financial resources and investments in plant and equipment, it is the human
resources that manages these other resources and makes a company competitive. This makes
the expertise and skills needed to manage human resources critical to an organisation’s
success.

Thus, this course is intended to enable you understand the function of HRM in organisations.
Specifically, the course is intended to enable you appreciate the role of human resource in
organisations; the concepts, principles, theories; and develop HRM skills

In this topic, we will learn about the nature and role of human resource management in
organizations.

Learning Outcomes
By the end of this topic you should be able to:
i. Describe human resource management
ii. Explain how HRM relates to the management process.
iii. Explain the responsibilities of human resource managers

Topic Content
1.1 Nature of Human Resource Management
Generally, managers perform five basic functions which include planning, organizing, staffing,
directing and controlling. In total these functions represent the management process. The
specific activities involved in each function include:
- Planning i.e. developing forecasts of environmental outlook, establishing goals and
objectives, developing plan/strategies and developing procedures and policies to guide
implementation.
- Organizing i.e. identifying activities to be performed and grouping related activities,
assigning responsibility, allocating resources, delegating authority to subordinates, establishing
channels of authority and communication and coordinating the work of subordinates.
- Staffing i.e. determining what type of people should be hired, recruiting prospective
employees, setting performance standards, evaluating performance, compensating
performance, counselling employees, training and developing employees.
- Directing i.e. guiding operations to get the job done. This involves ensuring effective
communication, and leadership, maintaining morale and motivating subordinates.
- Controlling i.e. monitoring and evaluating activities to ensure the firm achieves its
objectives. Monitoring involves assessing progress of activities, evaluating environmental
assumptions, and assessing allocation of resources. Evaluating involves establishing
performance standards, measuring and checking to see how actual performance compares with
these standards and taking corrective action where necessary.

Human resource management (HRM) function, usually delegated to a human resource

manager focuses on one of these functions- the staffing or personnel management function.

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Many organizations have realized that human resources is an important aspect and should be
handled carefully and well managed. There are three basic cornerstones or foundations of an
organization.
- Work
- Structure
- People

The term human resource was invented as a result of the realization that the people were a
resource (asset) of the organization. It is the people of all the resources and cornerstones
mentioned above who make the organization run. Other resources necessary in running an
organization are:
- Machinery and equipment
- Finance (funds) etc.
Without these resources, especially the people, there cannot be any business. This is why and
how people have become an important aspect of an organization. Nothing can be accomplished
without people- who are therefore a very critical resource.

The major concern of HRM is the handling/management of the people in all its aspects.
Training in HRM therefore becomes important in providing you with the concepts and
techniques you need to perform the ‘people’ or personnel aspects of your management job.
These aspects include:
- Determining the right number and type of people that would help run the organization
in the right way to enable it achieve its objectives.
- Recruiting and selecting the identified people/job candidates.
- Matching of the people with the jobs, that is placement and orienting new employees.
- Training and developing employees and managers.
- Appraising performance- evaluating employee performance
- Managing wages and salaries- compensating/remunerating/rewarding employees.
- Providing incentives and benefits.
- Communicating with employees- counseling, disciplining, handling grievances and
labour relations.
- Monitoring of the people’s working conditions in terms of safety, welfare and proper
maintenance of their records.
- Building employee commitment.
- Handling matters of promotions, transfers, retirements and separation.
If all these activities are done properly, then most people will be satisfied with their jobs.

Definition of Human Resource Management

Human resource management is the process of management that is concerned with acquiring,
training, appraising and compensating employees, and attending to labour relations, and health
and safety of the employees so that they can give their maximum contribution to efficient and
effective working to achieve organizational objectives.

Human resource management is normally treated as ‘staff’ rather than a ‘line’ function. This is
because it is considered a specialized area of management and handles all people based
problems irrespective of the department from which the problem arose. That is, it is a servicing
department to other managers and the department has functional responsibility to human
resources. Human resource managers have to advise the managing Director of the formulation

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of HRM policy and ensure that procedures to carry it out are effected.

1.2 Importance of Human Resource Management

The overall purpose of HRM is to ensure that the organization is able to achieve success
through people. Specifically, HRM is important in the following functions:
- Ensure that the organization obtains and retains skilled, committed and well motivated
workforce it needs.
- Enhance motivation and commitment by introducing policies and processes which
ensure that people are valued and rewarded for their contribution to the organization
and levels of skill and competence.
- Create a climate in which productive and harmonious relationships can be maintained
through partnerships between management and employees and cultivation of
teamwork.
Human resource management concepts and techniques are important to all managers
otherwise, managers will make personnel mistakes that may be costly to their organizations.
These mistakes include:
- Hiring the wrong persons for the jobs
- Wasting time with useless interviews
- Experiencing high staff turnover
- Having people in the organization who are not doing their best/giving maximum
contribution.
- Having the organization taken to court because of discriminatory actions and unsafe
practices.
- Having some employees think their salaries are unfair and inequitable relative to others
in the organization.
- Lack of training to undermine the department’s effectiveness.
1.3 Personnel Management and Human Resource Management
The management of people has adopted two approaches: personnel management and human
resource management.
There is a debate about whether there are significant differences between the two approaches
to HRM. However, significant number of business and government organizations have
renamed their personnel function as the HRM function. It could be argued that it has become
fashionable to speak of HRM, and that this is why many organizations have adopted the
concept. Management scholars argue that the difference between the two approaches can be
seen as a matter of emphasis and approach rather than one of substance.
The two perspectives are similar in that both recognize the role of people in the achievement of
organizational objectives, and personnel management, like HRM, recognizes that line
managers are responsible for managing people. The personnel function provides the necessary
advice and support services to enable managers to carry out their responsibilities. Further, both
personnel management and human resource management recognize their most essential
functions are recruiting and selecting employees, matching people to ever-changing
requirements: placing and developing the right people in and for the right jobs and reward
management.
However, management scholars have identified features which seem to distinguish personnel
management and HRM:
- Personnel management is reactive, and plays a servicing role to other departments whereas
HRM implies a proactive innovative role in the management of human resources to meet
organizational needs.

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- Personnel management emphasizes on implementation of procedures whereas HRM
emphasizes on strategic needs of the organization. HRM focuses on how to develop and utilize
human resources to efficiently implement the organization’s strategy in a changing
environment to achieve objectives.

It is important that managers understand and effectively practice HRM concepts and
techniques to avoid these mistakes in their organizations. Remember getting results is the
bottom line of managing and as a manager, you will have to get those results through people
performing the required activities. Thus to be successful, it is critical that managers hire the
right people for the right jobs, develop and motivate them to maintain an efficient and
enthusiastic work force to enable their organizations create and sustain competitive advantage.
Topic Summary
We have come to the end of topic One. In this topic we learnt that human resource
management is concerned with acquiring, training and developing, compensating employees,
and attending to labour relations ensuring health and safety of the employees so that they can
give their maximum contribution to organization.
We also learnt that HRM is part of management process concerned with the staffing function.
The responsibilities of human resource managers to whom the staffing function is delegated to
include: determining the right number and type of people that would help run the organization
in the right way; developing employees; compensating employees and enhancing employee
welfare for them to give maximum contribution to the organization to enable it achieve its
objectives.

Glossary
Human resource management: This is a process that is concerned with acquiring, training
and developing, appraising and compensating employees, and attending to labour relations and
ensuring the physical wellbeing of the employees.
Management: This is a process of planning, organizing, staffing, directing and controlling.

TOPIC ACTIVITIES

Activity
Human resource management experts maintain that the maintenance of people should be given
the same emphasis just as is usually given to the maintenance of machines and equipment.
Elaborate on this statement and discuss the justification for this assertion.
Assignment

i. Describe the term human resource management (HRM), clearly showing the key aspects of
HRM.

ii. Using appropriate examples, distinguish between line function and staff function.

iii. Human resource management function is increasingly becoming popular in Kenyan

organizations. Discuss reasons for the increasing importance of the function in organizations.

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 TOPIC TWO
HUMAN RESOURCE MANAGEMENT POLICIES
Introduction
Welcome to the second topic of the course. In Topic One, we learnt that human resource
management is a process which involves recruiting and selecting employees, performance
appraisal, training and developing employees, compensating employees and enhancing industrial
relations. To perform these activities effectively, managers need to develop and follow human
resource policies. The policies form the framework of handling HRM matters. In this topic, we
will learn about human resource policies. We will learn the nature and importance of HRM
policies, and the process of developing the policies.

Learning Outcomes
By the end of this topic you should be able to:
i. Describe the nature and importance of human resource policies.
ii. Describe the process of preparing human resource policies

Topic Content
2.1 Nature of Human Resource Policies
A policy is a predetermined guide established to provide direction in decision making or action
of managers. HRM policies are guidelines on the approach the organization intends to adopt in
handling HR matters to achieve organizational objectives. They define the philosophies and
values of the organization on how people should be treated, and from these are devised the
principles upon which managers are expected to act when dealing with HR matters. HR policies
therefore serve as reference points when HRM practices are being developed and when decisions
are made about people. These policies are important tools of HRM since they provide a
framework against which HRM functions are performed in line with corporate values throughout
the organization. These policies are important tools of HRM since they provide a framework
against which HRM functions are performed in line with corporate values throughout the
organization.

HR policies should be distinguished from procedures. A policy provides generalized guidance on

the approach adopted by the organization and therefore its employees concerning various aspects
of employment. A procedure spells out precisely what action should be taken in line with the
policy. All organizations have HRM policies that may be written or unwritten.

HR policies can be expressed as overall statements of the philosophy of the organization and its
values, and as guidelines in specific areas. Overall HR policy defines how the organization
fulfils its social responsibilities for its employees and sets out the attitudes towards them. It is an
expression of its values or beliefs about how people should be treated.

The values expressed (or main points included) in an overall HR policy may explicitly or
implicitly include:

i. Equity – Treating employees fairly and justly e.g. by providing equal opportunities for

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 employment and promotion and equitable payment system
ii. Quality of working life – continually aiming to improve the quality of working life and to
achieve a work life balance as a means of increasing motivation and improving results.
This involves increasing the sense of satisfaction people obtain from their work e.g. by
reducing monotony, increasing variety, empowerment.
iii. Working conditions – Providing health, safe and pleasant working conditions.
Organizations also develop specific policies to guide specific HRM matters. Major areas of
HRM where firms have specific HRM policies include:
i. Employment/hiring policy
E.g. recruitment and selection policies which indicate the steps/procedures to be followed
in hiring.
ii. Training and development policy
Indicates who goes for training, when, where and what employees are expected to gain
from such training. Training policy may state that every employee should attend 3 weeks
training within 1 year of being hired to ensure standardized or compliance with specific
standards.
iii. Promotion policy
Explains how people in the organization get promoted. For example, things like
performance, seniority, experience and training may be considered for promotion
iv. Disciplinary policy
Deals with how staff will be disciplined e.g. oral or written warnings, suspensions or
even dismissals.
v. Industrial relations policies
Pertaining to joining unions, collective bargaining procedures, strikes etc.
vi. Remuneration policy
Indicates how people are going to be compensated for their contributions to the
organization
vii. Public relations policy
How to project an organization’s image to the public
viii. Rules and regulations
The dos and don’ts- which give the basis of conduct
ix. Deployment policies
Guides on placement of newly hired workers. Guides how and when and why workers
are to be transferred.
x. Separation policies
Explains when and how people leave the organization on retirement, resignation
dismissal etc.

2.2 Importance of HR Policies

i. Policies provide a framework or basis for uniform and consistent handling of employee
matters and ensures consistent treatment of all personnel without favouritism or
discrimination or bias; and this helps to promote equity in the way people are treated,
eliminates double standards hence reduces conflicts and negative effect on employee
morale which may arise from favoritism and discrimination in handling of employee
matters.
ii. Policies establish indirect control over independent action by making a clear statement
about how things are to be done in the organization. By limiting discretion, policies in
effect control decisions and the conduct of activities without direct intervention by top
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 management.
iii. Policies give managers and supervisors more confidence in handling employee matters.
They enable managers know what to do in management matters and how to handle
employees and thus giving them authority to perform.
iv. Policies enhance industrial peace/harmony- if the policies are good and there is fairness
in following them.
v. Ensures proper control since policies provide guidelines for establishing and controlling
on-going operations in a manner consistent with the firm’s objectives
vi. Policies build employee enthusiasm and loyalty- if an organization has good policies and
are seen to be followed, for example if it is stated that promotion is purely on merit, it
motivates.
2.3 Important Components of HR Policies
i. They should be authoritative such that management and employees can have confidence
in applying them.
ii. They should be communicated accurately accompanied with relevancy during
induction/orientation of employees or during meetings and through circulars. A good
manager should always inform the staff of any changes in the policies.
iii. Personnel policies should be flexible- should change with changes in the environment.
iv. They should be very categorical- clear and definite in guiding managers to make
decisions. Thus for effective use of policies, managers are required to think through the
policy’s meaning, content and intended use. However, HR managers should not use
policies as excuses for not making decisions or for not taking action. Because policies
have a degree of flexibility the manager is not necessarily required to adhere strictly to
the policy statement.
At times managers should use their own personal judgment/discretion (using their experience
and assessment of the situation) to make decisions where necessary.
Remember the human resources manager has to advise the organization’s chief executive on the
formulation of HRM policy and see that procedures to carry it out are effected. HRM is a
servicing department to other managers and the department has functional responsibility for
HRs. In performing its functions HRM department is intimately involved with the assessment of
the events in the environment and their effect on HR function and advising the CEO accordingly.

2.4 Formulation HR Policies

HRM policies should be formulated by the HRM department who are experts in HRM and then
should receive approval from top management and the policies should have support from other
line managers who manage personnel. The policies must be communicated to the employees
with notes on implementation. The HRM department primarily provides expertise and also
leadership in ensuring that the policies are compatible with the current trends and conditions.
The following steps should be followed in formulating or reviewing HR Policies
i. Gain understanding of the corporate culture and its shared value
ii. Analyze existing policies- written and unwritten
iii. analyze external influences
iv. Assess any areas where new policies are needed or existing policies are inadequate
v. Consult top management on their views about HR policies and what they think could be
improved
vi. Seek views of employees about the HR policies e.g. in term of fairness and equity and

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 consistency of implementation.
vii. Seek views of union representatives
viii. Analyze he information obtained and prepare a draft policy
viii. Consult, discuss and agree on the policies with management and union
representatives.

Source: https://www.google.com/search?
site=&tbm=isch&source=hp&biw=1366&bih=635&q=human+resource+policy&oq=human+resource+policy&gs_l
=img.1.0.0j0i24k1l9.8536.16419.0.18496.21.19.0.1.1.0.634.4281.2-
1j7j1j2.11.0....0...1ac.1.64.img..9.12.4292.l8rfJPYpg8w#imgrc=Ih906fu7M76f8M%3A

2.5 Criticisms of HR Policies

i. Policies tend to make most managers too mechanistic- do not apply their discretion to
matters of personnel- they tie managers’ hands rather than being designed to aid. Thus,
policies may not always lead to good management decisions.
ii. Policies are not easy to formulate given the varied needs of stakeholders
iii. Philosophy or values of high ranking officers/managers usually override the policies of
the organization e.g. in recruitment.
iv. Some employees take advantage of the loop-holes in the policies
v. Policies are never reviewed occasionally to keep up with environmental changes
vi. Most organizations have good policies only on paper. Preparation
is one thing and implementation is a different thing.
Topic Summary
We have come to the end of topic two. In this topic, we learned that managers need to formulate
human resource management policies for effective management of human resource matters.
HRM policies are guidelines on the approach the organization intends to adopt in handling HR
matters to achieve organizational objectives. We also learnt that firms formulate overall HRM
policy and specific HRM policies for the specific HRM matters.
HRM policies are important tools of HRM since they form the framework of handling HR
matters to achieve organizational objectives. Policies also form a basis for uniform and
consistent handling of employee matters, which is important in enhancing industrial harmony.
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Preparation of HRM policies involve examining external and internal influences, consultation of
stakeholders and analysis of the information obtained.

Glossary
Policy- A policy is a predetermined guide established to provide direction in decision making or
action of managers.
Human resource management policies- These are guidelines on the approach the organization
intends to adopt in handling human resource matters to achieve organizational objectives.

TOPIC ACTIVITIES

Activity
Describe the process of developing HRM policies.
Assignment
i. Using suitable examples, describe HRM policies.
ii. Discuss the importance of HRM policies in human resource
management.

TOPIC THREE
JOB ANALYSIS AND JOB EVALUATION

Introduction

In Topic Two we learned that human resource policies are important tools of HRM. We also
learnt that human resource policies guide managers in recruiting employees to perform the
jobs in the organization. However, before recruiting employees, it is important to analyse the
jobs to be performed in the organization in terms of nature of duties and qualifications of the
people to perform the duties; and the relative worth of the jobs. In this topic, we focus on job
analysis and job evaluation. We will learn the nature and importance of job analysis and job
evaluation in human resource management (HRM).

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Learning Outcomes
By the end of this topic you should be able to:
i. Describe the nature and importance of job analysis.
ii. Describe the nature and importance of job evaluation.
iii. Describe job analysis methods.
iv. Describe job evaluation methods

Topic Content
3.1 Nature and Purpose of Job Analysis
Before recruiting people as employees, HR managers must establish first, what the people are
going to do in the organization and the qualifications of the people to meet the demands, in
other words the nature of the work to be done and the quality of the people to meet the
demands of the work. This is what is involved in job analysis.

Definition
The word ‘job’ in the context of HRM is an organizational unit of work. It is made up of a
collection of tasks, assignments, duties and responsibilities.

Tasks are the specific ‘things’ an employee does in an organization normally- specific
elements of routine nature e.g. for a secretary, tasks include typing, receiving visitors etc.
Assignments are those other tasks that are not of routine nature but may come upon the job of
an employee on a periodic basis e.g. making tea for a secretary for visitors on a day.
Duties arise from tasks; once one has been given tasks, they become duties.
Responsibility is the answerability in the performance of tasks. Job analysis focuses on what
people actually do or nature of work that employees perform in the organizations- specific
tasks and responsibilities that constitute the job, along with the skills, knowledge and abilities
that are required of the worker to perform the tasks and responsibilities.
Job analysis includes not only the study of the work itself, but also an analysis of the
conditions and the environment in which the work is performed.
From the standpoint of the HR department job analyses are made in order to discern certain
factors relating to the job. Such factors includes:-
i. Evaluation of the work station and its relation to other stations
ii. Identifying the various activities/tasks to be performed in a job.
iii. Determining the requirements of a job in terms of tasks and responsibilities and also in
terms of the quality of the staff- educational and training requirements, skills and
experience required.
iv. Clarifying lines of authority and responsibility in relation to the job under or over
which position the job will be.
The task of job analysis therefore can be categorized into two broad components:-
a. Job descriptions
b. Job specifications
Uses of job analysis information
Employers use job analysis information to support several HRM activities
i. Recruitment and selection
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 Job analysis provides information about what the job entails and what human
characteristics are required to perform these activities. This information in the form of
job description and specifications, helps managers decide what sort of people to recruit
or hire.

ii. Compensation
Job analysis information is critical in estimating the value of each job and its
appropriate compensation. Compensation (e.g. salary and bonus) usually depends on
the job’s required skill and education level, safety hazards degree of responsibility etc,
factors which are assessed through job analysis. Also job analysis provides the
information to determine the relative worth of each job which many employers use to
group jobs into appropriate classes or grades e.g. Secretary Grade III and IV which is
an important consideration in compensation decisions.

iii. Performance appraisal

Performance appraisal compares each employee’s actual performance with his/her
performance standards/targets. Managers use job analysis to find out what the
employees’ duties and performance standards are.

iv. Training
Job analysis lists the job’s specific duties and requisite skills, and therefore the training
that the job requires.

v. Discovering unassigned duties

Job analysis can also help reveal unassigned duties for example, job analysis can reveal
that production manager is responsible for various duties such as production scheduling
and raw material purchasing and learn that none is responsible for inventory
management. Hence review of jobs may reveal the need for someone who should be
managing inventory.

3.1.1 Job Description

Job description is a written description of what an employee is to do on a particular job. It
concerns itself with the content of the job i.e. tasks, duties and responsibilities and working
conditions. It includes the following factors:-
i. Job title specifying the name of the job e.g. sales supervisor, marketing manager
etc. This can tell a lot about a job and summarizes what the job entails work
location and salary range.
ii. Main/key tasks or work activities to be performed in the job i.e. duties and
responsibilities e.g. teaching, selling or cleaning, and supervisory responsibilities.
iii. Distinctive characteristics of a job. In some jobs these are already stated e.g.
travelling for a sales man.
iv. The job relationship to other jobs i.e. reporting relationships or indication of whom
the job holder works closely with.
v. Working conditions such as cleanliness, noise, travel, safety risks etc
vi. Skills in handling tools and equipment that the holder of the job will be expected to
use and how they are to be used.
vii. Human behaviors e.g. communication e.g. decision making and magnitude of
discretion, authority granted, resources available to the job holder e.g. commitment

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 of resources for recruitment within agreed budget.
viii. Who evaluates the employee or to whom one reports i.e. immediate superior
The major purpose of job description is to help the people know the nature of the job, who will
fit in the job and thus assist in recruitments.

3.1.2 Job Specification

This becomes relevant after the job has been properly described and the people know of their
job requirements. Job specification therefore simply describes or defines the qualifications
required of the person required to perform the job as described i.e. what human traits and
experience are required to do the job well. Job specification therefore includes the following
elements:-
- Academic and/or professional qualifications
- Experience
- Skills
- Age
- Physical abilities e.g. sight
- Personal attributes e.g. personality, communication skills etc.
- Marital status for some jobs e.g. Dean of students
- Religious inclination e.g. Christian
- Gender
- Performance standards e.g. a secretary who can type 100 words per minute.

Note
There are factors that may be specific to a given job while less important to others, HR
manager must therefore determine which elements are very crucial in the job and the
secondary ones. Job specifications are useful for selection, training etc.

3.1.3 Methods of Conducting Job Analysis

Job analysis can be done through:-
i. Direct observation of the job performance by an expert. The method is useful when
jobs consist of observable physical activities e.g. factory or accounting work but not for
unobservable jobs e.g. for design engineer or lawyer. However, a skilled worker can
make the job look easy or an inexperienced worker can make the job look difficulty.
ii. Interviewing the incumbent job holders to tell what the tasks and skills required are.
However the employee may exaggerate the importance of the job or may forget the
details of the job or emphasize the most recent events or may not be able o express
himself clearly.

iii. Having the employees fill out questionnaires to describe the job related duties and
responsibilities. Here, you have to decide what questions to include i.e. whether
structured checklists with number of duties or tasks for the employee to indicate
whether or not he/she performs the tasks; or open ended questions for the employees to
describe the major duties of their jobs.

iv. Interviewing the supervisor. However, superior may surprisingly be out of touch with
the details of the job. You may find that they frequently have never done the job
themselves or may allow their description of the job to be influenced by the opinion of
the job holder.
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 v. Doing the work yourself- but the expert or analyst should be careful not to form too
subjective an impression e.g. if he/she is poor in figures he may tend to overestimate
difficult of an accounting job.
vi. By experts sitting in a committee to discuss and analyze the job
vii. Work diaries- the job holder records his/her activities in detail throughout the day over
a period of about 1 month. The dairy is then analyzed to obtain a list of duties and their
frequency. This method can be accurate, but job holder may often forget to complete it
until the end of the afternoon when recollection of the day’s work may not be reliable.
3.2 Job Evaluation
One of the objectives of job analysis is to provide information to conduct job evaluation. Job
evaluation is a systematic process whereby jobs are systematically evaluated i.e. compared to
each other to establish their relative worth. Job evaluation is a formal and systematic
comparison of jobs to determine the worth of one job relative to another and eventually results
in a wage or salary hierarchy. The basic principle is that jobs that require greater
qualifications, more responsibilities and more complex job duties should be paid more highly
than jobs with lesser requirements.

The basic procedure is to compare the job in relation to another e.g. in terms of required effort,
responsibility, skills and working conditions. Job evaluation also includes methodologies and
techniques and equipment, skills and knowledge required in doing jobs and compares those
jobs with similar jobs.

Importance of Job Analysis

i. To establish a rational pay structure and reduce arbitrary methods of pay determination
by introducing an element of objectivity.
ii. To justify wage differentials however, note that job evaluation does not determine pay
scales but merely provides the evidence on which they can be devised.
iii. To facilitate or serve as a platform for recruitment and retention of employees
iv. To facilitate promotion through grades specification.
3.2.1 Methods of Conducting Job Evaluation
Job evaluation can be done by a management consultancy firm with specialized staff or an
organization’s job evaluation committee.
Methods of performing job evaluation include:

i. Ranking
Here committee goes for brief job description and compares the job as a whole with other jobs
and ranks all the jobs on the basis of perceived importance and overall job difficulty and
variety, responsibility, experience and knowledge required. The method is simple, inexpensive
and fast to operate. However, is simplistic and difficult to justify as it relies heavily on the
subjective assessment of the evaluations.

ii. Grading/Job classification

This method involves deciding on the grades of the jobs in the organization. It involves
definition of the job description and specification of each grade. Committee matches
specification for each job with various grade definitions until an appropriate grade is found for
each job. e.g. Grades A and B containing simple tasks or jobs at elementary level of office
work or tasks requiring limited tray no previous experience, while grades F, G and H
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containing tasks requiring some experience or special tasks and grades P, Q, and R containing
jobs of high specialized or professional level. The method is simple and fast, less expensive,
takes into account predetermined values e.g. training and experience. Also, it can be justified.
However it involves generalities and is simplistic.

iii. Point system method

This method is a widely used ranking method in which a number of compensable factors are
identified e.g. training and skill, effort, responsibility and working conditions and then the
committee analyses each job specification to decide how many points (weight based on its
relative importance) shall be awarded for each factor. Then the degree to which each of the
factors is present on each job is determined and the total point value is obtained for rating of
the jobs. Hence, when the total points of a job are set against other totals indicate the position
of the job in the hierarchy. This is the method that is commonly used. The method minimizes
bias due to judgments and is difficult to manipulate.

iv. Factors comparison

This method appears to be the most accurate and one of the most widely used job evaluation
methods. It is actually a refinement of the ranking method and entails deciding which jobs
have more of certain compensable factors.

With the ranking method you generally look at each job as an entity (as a whole) and rank the
jobs. With the factor comparison method you rank each job several times- once for each
compensable factor you choose. For example, jobs might be ranked first in terms of the factor
‘skill’. Then they are ranked according to their ‘skill’, ‘effort’, ‘responsibility’, ‘working
conditions’ etc. Then these rankings are combined for each job into an overall rating for the
job. Further, each factor is assigned the actual monetary value dependent on its relative
importance in the operation. Then the final ranking is based on the wages assigned to each
factor.

The method is similar to the point system that we still select compensable factors for each job.
But instead of assigning points, we assign each factor with the actual monetary value
dependent on its relative importance in the operation. The method is difficult as it includes
other additional factors. However, once prepared it is easier to use in job to job comparison.

Topic Summary
We have come to the end of topic three. In this topic, we have learned that before recruiting
employees firms need to conduct analysis. Job analysis involves determining the nature of jobs
(job description) in the organization and the qualifications of the people to perform the jobs
(job specification). Human resource managers use job analysis information in supporting
HRM activities: recruitment and selection, compensation, performance appraisal, training and
discovering unassigned duties. Job analysis methods include direct observation of job
performance, interviewing job holders, having employees fill out questionnaires, interviewing
the supervisor, doing the work yourself, experts analyzing the job and use of work diaries.
Job evaluation is a formal and systematic comparison of jobs to determine the worth of one job
relative to another and eventually results in a wage or salary hierarchy. Job evaluation helps in
establishing pay structure, justifying wage differentials, facilitating employee recruitment and
selection, and promotion. Methods of performing job evaluation include ranking, grading/job
15
classification, point system and factor comparison.

Glossary
Job analysis- Determination of the nature of the job i.e. responsibilities and duties, and the
kind of person who should be hired for it in terms of education, training and experience.
Job description- A description of the content of the job i.e. tasks, duties and responsibilities
and working conditions.
Job specification- Describes or defines the qualifications required of the person required to
perform the job as described i.e. what human traits and experience are required to do the job
well.
Job evaluation- A systematic process whereby jobs are systematically evaluated i.e. compared
to each other to establish their relative worth.

TOPIC ACTIVITIES
Activity
Using relevant examples, explain the term job analysis and discuss the
applications of job analysis in management of human resources.

TOPIC FOUR
HUMAN RESOURCE PLANNING
Introduction
Welcome to Topic Four. In Topic Three, we learnt about job analysis and job evaluation. We
learnt that job analysis is important in facilitating employee recruitment and selection
decisions. However, before recruiting employees, it is important to prepare a human resource
management plan (HRM) forecasting how many and what kind of employees will be required
in future This topic discusses human resource planning. We will learn the nature of planning,
the importance and process of planning.
Learning Outcomes
By the end of this topic you should be able to:
i. Describe human resource planning.
ii. Discuss the importance of human resource planning in human resource management.
iii. Describe the process of human resource planning.
iv. Describe approaches to human resource planning.
v. Discuss the limitations of human resource planning.

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Topic Content
4.1 Nature and Purpose of Human Resource Planning
As we learnt in Topic One, HRM is the process of recruiting, hiring, training and developing
and maintaining an effective work force within the organization. This means that HRM
consists of three stages
i. The first stage includes activities designed to attract productive employees to the company.
The primary activities during this stage are planning, recruiting and selecting employees.
ii. The second stage consists of activities to develop employees into a productive workforce.
Performance appraisal, training and developing employees are the essential activities during
this stage.
iii. The third stage includes activities that maintain the workforce such as compensating,
enhancing industrial relations and innovation in methods that will maintain employee
productivity.
To perform these activities effectively and efficiently HR also has to be planned like all other
resources. Manpower planning seeks to maintain and improve an organization’s ability to
achieve corporate objectives by developing a strategy for the acquisition, utilization,
development (improvement) and retention of an organization’s human resources.

Basically HR planning is an attempt to forecast how many and what kind i.e. quantity and
quality of employees will be required in future and to what extent this demand is likely to be
met. In other words, it is an attempt to identify the organization’s demand for human resources
and means to ensure that a sufficient supply of labour is available to meet that demand or
process of deciding what positions the firm will have to fill in future and how to fill them. To
ensure that the organization has the right human resources, it needs not only to maintain HR’s
but also to develop the HRs through training and development. HR planning also involves
allocation of resources to improve the quality of working life (QWL).

HR planning results into a comprehensive HR plan, a document that includes estimates of the
number of employees needed, where they will come from and how they will be recruited,
selected and trained and motivated to reach the desired levels of performance and achieve the
organization’s objectives. The HR plan has to be integrated with the organizations strategic
plan and ensures that sufficient human resources are available to achieve the company’s goals
and objectives.

The main objectives of manpower planning are to help management in the following areas:-
i. Anticipating shortages or surpluses of manpower in the organization. The findings can then
be used in planning for recruitment matters and this assists management avoid imbalance in
the distribution or allocation of manpower in the organization and this ensures that the right
number and kind of employees (quantity and quality) especially the scarce top management
are provided at the right time and in the right place. And also avoid sudden redundancy
(dismissal because the need to a particular work for the employee has diminished or ceased)
and to formulate transfer and succession policies.

ii. To help management in the estimation of labour costs and thus control the cost aspect of
HRM and ensure that legislative requirements are satisfied and ensure that employee
expectations are satisfied both in terms of monetary rewards and opportunities to develop their
abilities and have satisfying jobs.
iii. To help in training and development of personnel. This is significant in ensuring that
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skilled workers will be available when and where required.
iv. To help determine accommodation requirements i.e. allow for facilities, do be provided for
e.g. offices, toilets, car parks, canteens etc.
Generally HR planning helps in ensuring that provision for future manpower requirements will
be available and ensure greater productivity within the organization.

4.2 Human Resource Planning Process

Companies usually prepare long-term HR plan which attempt to forecast HRs for about five
years ahead. To produce a plan showing how many and what kind of employees are expected
to be required in future; the firm must consider the demand for labour, its potential supply and
the external environmental conditions. HR planning is a process that involves the following
steps:
i. The process begins with establishing the organization’s strategic objectives. Sales and
production forecasts are made from the company’s objectives. These forecasts may also use
sales projections based on past trends and economic forecasts.
ii. Examination of the existing situation to assess the present utilization of manpower and to
see if the existing organizational and HR effectiveness can be improved. The procedures
involve:
- Job analysis i.e. job descriptions and job specification, job evaluation etc.
- Performance appraisal and potential of present employees
- Number of employees in various categories
- Estimation of labour turnover and absence statistics and their effect on organizational
performance.
- Age distribution of workers – This affects the number of people the organization is going to
lose.
- Amount of overtime and part time marked.
- General level of payment compared with other firms.
Note: That for all the above, accurate and complete personnel records are essential- hence need
for HRIS. There is also need to assess the external environment e.g. population trends,
legislation regarding the terms and conditions of work and government policies on education,
retirement etc.
iii. Organizational objectives are combined with sales and production forecasts to generate a
HR demand (human resource need) forecast. This forecast is then refined through job analysis,
job descriptions and job specification. This results in forecasts for specific numbers of
employees who have sets of specified skills and abilities. Estimating the future demand may
also involves making expert estimate, historical comparison, and use of models like trend
analysis and ratio analysis.
iv. Managers analyze current supplies of employees having those skills and abilities (internal
supply and what is available in the labour market (external supply). Then compare these
supplies and skills to the human needs forecast to determine whether more or fewer employees
will be needed i.e. matching forecasts of demand and supply helps to pinpoint shortages in
number and kind of HR and highlight areas the organization shall be over staffed in future and
inform the opportunities that exist in the labour market to hire good people.
v. The need for employees is compared to what is available and a plan for recruitment,
selecting and transferring employees is developed.
vi. The plan is compared to the human needs forecasts to ensure that it will accomplish its
purpose. The purpose is to have enough of the right type of employees in the right jobs at the
rights times to reach the company’s goals.
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Note
After considering all the internal and external factors, the man power plan made shows in
detail by function, occupation and location, how many employees it is practicable to employ at
various stages in the future. It should have;-
- Jobs which will appear, disappear or change
- Recruitment, redundancy or retirement programmes
- Training and development programme
- Industrial relations policy
- Arrangements for feedback incase of modification in the plan or company objectives.
- Details of arrangements for handling any human problems arising from labour deficits or
surpluses (e.g. early retirements or natural cases)
- Accommodation plan
To meet its objectives, a good HR plan must provide adequate and also accurate information
about human resources- referred to as HR profile, which must include:-
- Number of positions available in the organization (the establishment).
- Quality of staff required to fill those positions in terms of education, training, experience etc.
- Policies and procedures for training and development including the career path especially for
the skilled and professional staff.
- The predetermined rate at which the employees leave the organization especially through
retirements, resignations and dismissals.
- Replacement procedures both from within and also from external job market.
A good human resource plan must:-
- Reflect the goals and objectives of the organization
- Take into account the organizations available resources
- Remain flexible because jobs themselves change and the internal and external environment
also change.
- Have contingent plan- plan that are made to cater for environmental changes.
4.3 Approaches to Human Resource Planning
There are various tools for projecting personnel needs. The approaches include following:
i. Trend analysis
Trend analysis means studying variations in your firm’s employment levels over the last few
years. For example, you might compute the number of employees at the end of each of the last
5 years in each sub-group like sales, production etc. The aim is to identify trends that might
continue into the future. Trend analysis can provide an initial estimate of future staffing needs.
However, other factors like changes in sales volume and productivity also affect staffing
needs.

ii. Ratio analysis

Ratio analysis involves making forecasts based on the historical ratio between some causal
factor like sales volume and the number of employees required such as number of sales people.
If sales productivity were to rise or fall, the ratio of sales to sales people would change.

iii. A scatter plot

A scatter plot shows graphically how two variables- such as sales and the firm’s staffing levels
are related. If they are, then if you can forecast the business activity (like sales), you should be
able to estimate your personnel needs.

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4.4 Limitations of HR Planning
i. Detailed records are needed ad thus lack of complete and accurate employee records
maintained for at least five years which can be used to detect trends in employee movement
can affect quality of the plan.
ii. It is difficult to predict the future.
Forecasting can be uncertain due to environmental changes e.g. changes in technology and
government policies on wages and salary.
iii. Opposition or skepticism among members of management.
All must be convinced of the value and support human resource planning if it is to be a
success.
iv. Resistance to changes expressed in the plan e.g. the forecasts of labour structure, with their
effects on skills and status may be regarded as a threat- resistance to change is a behavioral
problem
v. The plan may indicate recruitment and training programmes, which although desirable may
be impossible to put into practice due to lack of money thus lendering the plan useless.
vi. Sometimes it is difficult to realize tripartite agreement- agreement between the government,
labour union and organization/management especially due to divergent interests and in trying
to resolve unemployment problem.
vii. Employment lobbying e.g. requests from higher authorities (influential people in the
organization and in government) for employment of certain people sometimes affects
implementation of the plan.

Topic Summary
This topic discussed human resource planning. We have learnt that human resource planning is
the process of identifying the organization’s demand for human resources and means to ensure
that a sufficient supply of labour is available to meet that demand.
Human resource planning is important in enabling human resource managers anticipate
shortages or surpluses of manpower in the organization, estimate labour costs, plan training
and development of personnel and determine accommodation requirements.
We also learnt that human resource planning is a process in which an organization’s internal
and external situation is considered to develop a human resource plan. The plan includes
estimates of the number of employees needed, where they will come from and how they will
be recruited, selected and trained and motivated to reach the desired levels of performance and
enable the organization achieve it’s objectives.

Glossary
Human resource planning- An attempt to identify the organization’s demand for human
resources and means to ensure that a sufficient supply of labour is available to meet that
demand.
Human resource plan- A comprehensive document that includes estimates of the number of
employees needed, where they will come from and how they will be recruited, selected and
trained and motivated to reach the desired levels of performance.

TOPIC ACTIVITIES

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Activity

‘Human resource planning is a prerequisite for effective management of human resources.’

Explain how you will go about preparing a human resource plan.

Assignment
i. Explain the importance of human resource planning.
ii. Describe the process of human resource planning.
iii. Describe the contents of a human resource plan.
iii. Discuss the limitations of human resource planning.

TOPIC FIVE
RECRUITMENT AND SELECTION

Introduction

In Topic Four we learned that firms need to develop human resource plans indicating what
positions the firm will have to fill in future and how to fill them . After developing the human
resource plan forecasting the employees required in future, the next step is to recruit and select
employees. In this topic, we will discuss employee recruitment and selection. Effective
recruitment and selection are critical to ensure organizations have the right quantity and
quality of employees.

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Source: http://clmlaw.co.uk/employment_law/wp-content/uploads/2013/08/shutterstock_117302092.jpg

Learning Outcomes
By the end of this topic you should be able to:
i. Describe employee recruitment and selection.
ii. Explain the need for effective recruitment.
ii. List the steps in the recruitment and selection process.

Topic Content
5.1 Nature of Recruitment and Selection
Recruitment is concerned with locating vacant positions in the organization’s structure and
deciding what position to fill, identifying the sources (internal and external) of personnel to fill
those positions and attracting candidates to fill the positions. At this stage, the organization is
not yet in contact with the potential employees and the whole thing is largely internal. In
selection the organization is now in contact with the potential employee and the process
involves choosing from among candidates from within the organization or from outside, the
most suitable person for the current or for the future position. The purpose of recruitment
activities is to find and attract sufficient and suitable potential employees to apply from job
vacancies in the organization. The purpose of selection activities is to identify the most
suitable applicants and persuade then to accept a position in the organization.

22
Effective and efficient procedures from recruitment and selection are important to enable
organizations find and employ staff, and build a strong work force that can consistently fulfill
their roles and are capable of taking on increased responsibilities to deal with environmental
opportunities, which is necessary to create and sustain a firm’s competitive advantage.

5.1.1 Recruitment
Recruitment process starts with employee requisition which is done by the respective line
(user) departments. However, even at this stage, if must be done in coordination with the
human resource department. It must include job analysis to know the job descriptions and job
specifications.
A good job requisition must then have the following:
- Position/job title or designation
- Brief summary of the principle tasks and responsibilities.
- Brief summary of education, training, experience and any other special qualities (e.g.
computer skills) that are required for that particular job.
- Any other additional information which may be useful to the HRM in advertising for
the job e.g. the working conditions, gender, language if required, marital status or
sound physical ability.
- May also include the date when the potential employee should report
- Should indicate the salary to be given.
Once employment requisition has been handed to the human resource department, the rest now
remains to this department. These include drafting an advertisement (to entice potential
applicants as well as to inform them about the basic features of the job, deciding the channel of
reaching the potential candidates, advertising in the newspapers, professional journals, using
the internet, direct contact, going to colleges, through recruitment agencies/ consultancies. The
HRM can also seek recruits from within through promotion, referrals from people within the
organization, unsolicited applications/walk-ins from people interested in the firm. The HRM
department then reaches the candidates through the above means of communicating with
potential applicants.

Increasingly organizations are using the internet. One of the easiest ways to get into e-
recruiting is to use the organization’s own Web page to solicit applications. By using their own
Web page, organizations can highly tune their recruitment message and focus in on specific
people given the interactive nature of this medium.

5.1.1.1 Internal and External Recruitment Sources

The sources from which an organization recruits potential employees are a critical aspect of its
overall recruitment strategy. Generally, organizations recruit from within and external sources.

Relying on external sources offers a company several advantages. First, it generates a pool of
applicants who are well known to the firm. Second, these applicants are relatively
knowledgeable about the company’s vacancy, which minimizes the possibility of inflated
expectations about the job. Third, it is generally cheaper and faster to fill vacancies internally.

In spite of the advantages of internal sources, there are also several good reasons why
organizations might decide to recruit externally. First, for entry-level positions and perhaps
even for some specialized upper-level positions, there may not be any internal recruits from
which to draw. Second, bringing in outsiders may expose the organization to new ideas or new
23
ways of doing business. Using only internal recruitment can result in a workforce whose
members all think alike and who therefore may be poorly suited to innovation. Finally,
recruiting from outside sources is a good way to strengthen the organization and enable the
organization develop advantage over its competitors.

Note
All those activities that enable an employer to be in contact with the potential employee
constitute recruitment. Once the organization’s recruitment activities are completed and have
succeeded in attracting sufficient numbers of relevant applicants from the external labour
market, the next stage involves selection.

5.1.2 Selection
The aim of the subsequent selection activities is to identify the most suitable applicants and
persuade then to join the organization. Thus selection involves evaluating the suitability of the
candidates for various jobs. However, selection process is very much a two way process, with
the candidate also assessing the organization.

The first step in the selection process is receiving responses/applications from potential
candidates and the user departments and HRM department start sifting (examine carefully to
separate) through the applications e.g. CVs and certificates. The second step is short listing the
candidates who have applied and drawing up a shortlist of candidates. The number short listed
for each position varies from organization to organization depending on their policies and
resources, usually three people are shortlisted for one position.

The parameters to be used in doing the short listing come from the job specification. However,
there is usually some flexibility with the parameters for example, requirement on work
experience may be relaxed where education and training is good. Once this is done, the
candidates are invited for selection interview which may be at the company premises or any
other specified place e.g. major town. The interviews conducted may include written tests,
practical performance testing, and oral interview which is the most common. HRM department
coordinates all the necessary preparation for the interviews. During the interview, the
interviewers need to create a conducive atmosphere in which the interviewees can express
themselves. The interviewers should also have ability to listen and questioning skills, and
asking relevant skills. Medical examination is also part of the selection process in some
industries e.g. food processing, hotels and pharmaceutical firms. Some organization e.g. banks
subject candidates to security checks and may require a certificate of good conduct. The
selection process also includes making follow-up of information provide in recommendations
of referees (people who know the applicant’s character and abilities, and who are not
necessarily relatives).

Once the interviews have been completed and results processed, a decision is made about
choice of candidates and a job offer is made to the selected candidate. The last part of the
selection process is communication to all the candidates- those who have not been selected
should also be informed in the most acceptable way. Those who have been accepted will
normally be informed. If there is another remaining interviews or test, they should be
informed.

The last activity in the selection process is the offer of employment position. An offer of

24
employment should be put in writing because legally it is a contract. The employee should be
given a letter of offer. The initial offer is usually for probation because the employee and
employer have an option to turn down the offer and this is a transition period of learning each
other. Probation is the period of time during which an employer can see if a new worker is
suitable. The period varies from organization to organization for example, it can be 3 months,
6 months, 1 year or 2 years’ probation. In case of change of the probation period (e.g.
extension) it should be communicated in writing to the employee.

The letter of offer normally stipulates some of the basic information which the employee must
have e.g. the job title, department or section and in some organization the station where you
are supposed to report, the effective date when the job starts, the salary structure and entry
point, incremental rates and dates, what kind of leaves an employee can get, e.g. sick leaves,
how many days. Some organizations give employees a hand book containing terms of service
including rules and regulations.

Once all these are finished and the person signs acceptance of the offer, the person is now an
employee of the organization. Some organizations give some loans or scholarships during
probation period and others do not. A good organization should try to make the employee feel
secure right from the probation period to avoid early turnover.

Topic Summary

We have come to the end of Topic Five. In this topic we learned that recruitment includes all
those activities that enable an employer to be in contact with the potential employees and
attracting sufficient numbers of relevant applicants. Selection involves receiving applications
from potential candidates, sifting through the applications, short listing the candidates,
conducting interviews, selecting best candidate(s) and offer of employment.

We also learnt that effective and efficient recruitment and selection are important to enable
organizations attract and employ the required number of employees with the required skills, to
competently perform their roles and enable the organization create competitive advantage.

Recruitment involves all those activities that enable an employer to be in contact with the
potential employees. It starts with employee requisition, drafting an advertisement to inform
and entice potential applicants, deciding the channel of reaching the potential candidates

Selection involves evaluating the suitability of the candidates for various jobs. The process
involves receiving applications from potential candidates, short listing of the candidates,
conducting interviews and offering the job to the selected candidates.

Glossary
Recruitment- Process of locating vacant positions to fill in the organization identifying the
sources (internal and external) of personnel to fill those positions and attracting candidates to
fill the positions.
Selection- Involves evaluating the suitability of the candidates for various jobs, selecting the
best candidate and offer of employment.

25
TOPIC ACTIVITIES

Activity
Using an organization you are familiar with, describe the activities human resource managers
perform in employee recruitment and selection.

Assignment
i. Describe the activities involved in employee recruitment and selection.
ii. Describe the main sources of job candidates.

TOPIC SIX
EMPLOYEE ORIENTATION AND TRAINING

Introduction

In the previous topic, we learned that the processes of employee recruitment and selection.
Recruitment and selecting high potential employees doesn’t guarantee that they will perform
effectively and efficiently. They need to know what to do and how to do it. This can be
achieved through orientation and training programmes. Thus, in this topic, we are going to
learn the activities of employee orientation and training.

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Source: https://ww.deluxe.com/blog/six-employee-training-tips-help-prevent-fraud-business/
Learning Outcomes
By the end of this topic you should be able to:
i. Describe the concepts of orientation and training
ii. Discuss the importance of employee orientation and training
iii. Describe the activities involved employee orientation and training.
iv. Describe employee training methods

Topic Content

6.1 Orientation
Thus, once employees have been hired, the employer must orient and train them to ensure that
the employees know what to do and how to do it. Thus employee orientation is a procedure for
receiving and providing new employees with the basic background information about the firm
to enable him/her settle down quickly and start working. Employee orientation provides
employees with the basic background information required to perform their jobs satisfactorily.
Induction is seen as a welcoming process for the selected people or means of introducing the
new employees to the organization in which an employee is shown what is around and warned
against what is not available and what is not allowed in the organization. The orientation
process can be formal or informal. Informal orientation is not usually very effective as a
number of things are taken for granted and consequences may be serious. There is need for
formal induction with a timetable e.g. when to meet the section heads, the MD etc.
The length of the orientation period will always vary depending on the level at which the
employee is joining the organization, the urgency at which the worker is needed to start work,
the size of the organization, how much information the employee has to know and whether it is
done for one person or to a group of people. Formal orientation may be done through the
following methods:
- Lecture sessions
- Employee hand books – where all the organization’s rules are written
- Organizational tours
- Group seminars
Levels at which induction is to be done:-
First is the HRM department- where the HR specialist or in a small firm, the office manager
27
usually performs the first part of the orientation. Thus the new employee is received by the HR
department and the reasons for orientation are explained. Basic matters like working hours and
vacations are explained. The person in HR Department then introduces the new employee to
his/her new supervisor.

The supervisor or immediate boss- the person to whom the employee is to be responsible to
sometimes continues the orientation by explaining the organization of the department and by
introducing the person to his or her new colleagues, familiarizing the new employee to the
work place and takes the new employee through the work that he/she will do in the
department.
Then move to the departmental heads where the new employee is to work. To the MDs or
CEO’s office, then to other departments.
The person is then is then introduced to any other relevant/appropriate station or groups in the
organization e.g. many organizations have safety and welfare committees, and the new
employee will be introduced to its chairman, the medical dept, shop steward for union matters,
to any other professional group’s e.g. company lawyer. The employee can also be introduced
to social recreational facilities in the organization as well as external professional clubs.
Information covered during induction includes:
- History and nature/functions/operations of the organization
- Vision, mission and objectives of the organization. Today’s induction programmes are
emphasizing the organization’s mission and employee’s role in that mission and to
making the recruit feel part of the productive team as soon as possible.
- Structure of the organization
- Code of rules and regulations
- Scheme of services including information on employee benefits
- Personal policies
- The daily routine
- Safety measures
- Facilities tour
- Specific departmental responsibilities
- Any other important external institutions e.g. bankers and insurers
- Any other significant environmental factors
Importance of induction
- Adequate induction process is important to help the new employee feel welcome and at
home and part of the organization, hence feel secure and settle quickly in the
organization which is important in making the new employee productive.
- It thus plays a pivotal role in acquainting the new employee to the environment,
company rules and regulations.
- Most employees suffer from reality shock- this is the gap between the employee
expectations and the actual organizational reality- induction reduces this. Thus it helps
in creating a positive first impression to new employees.
- Helps in clarifying the organization to the employee e.g. mission, objectives, structure
and work processes. Without this basic information understanding on things like rules
and policies, new employees may make time consuming or even dangerous errors, and
their performance and the firm’s will suffer.
A successful orientation should accomplish the following:
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 - The new employee should feel welcome and at ease.
- He or she should understand the organization in a broad sense (its past and present,
culture, and vision of the future) as well as the key facts such as policies and
procedures.
- The employees should be clear about what is expected in terms of work and
behaviours.
- The person should have begun the process of becoming socialized in the firm’s way of
acting and doing things.
Characteristics of effective orientation programmes
- Employees are encouraged to ask questions
- Programme includes information on both technical and social aspects of the job
- Orientation is the responsibility of HR department and the new employees’ manager
- Embarrassing new employees is avoided
- Formal and informal interaction with managers and peers occur.
- Programs involve relocation assistance such as house hunting information sessions
- Employees learn about the company’ products, services and customers.
Since not all new employees/hires react to orientation in the same way, supervisors should
therefore follow up and encourage new employees to engage in orientation programme so as to
gain from the programme and quickly become productive.

The basic activity after induction will be placement. Here:

- The person is posted
- Issued with a job description
- Briefed on any special job requirement and conditions
- Then the person is ready to start working
- Promotion/demotion/transfers are also referred to as placement.
Any other thing is now learnt as the person is doing the job and through training and
development programmes.

6.2 Training
Immediately after the orientation, training should begin. Training is a formal and systematic
modification of behaviour through learning which occurs as a result of education, instruction,
development and planned experience. Training means giving new or present employees the
skills they need to perform their jobs. It may involve showing a new hire how to sell your
product or how to handle a machine. The fundamental aim of training is to help the
organization achieve its purpose by adding value to its key resource- the people it employs.
Training means investing in people to enable them to perform better and empower them to
make the best use of their natural abilities. The particular objectives of training are to:
- Develop the skills and competences of employees and improve their performance e.g.
for remedial training aimed at reducing or eliminate identified performance
deficiencies among employees.
- Help people to grow within the organization in order that, as far as possible, its future
needs for human resources can be met from within.
- Reduce the learning time for employees starting in new jobs on appointment, transfer
or promotion and ensure that that they become fully competent as quickly and
economically as possible.

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 - Enable employees adapt to environmental changes e.g. changes in technology.

Benefits of training and development

Effective training can:
- Minimize learning costs- costs involved with knowledge acquisition.
- Improve individual, team and organizational performance in terms of output, speed and
overall productivity.
- Improve operational flexibility by extending the range of skills possessed by employees i.e.
multi-skilling.
- Attract high quality employees by offering them learning and development opportunities,
increasing their levels of competence and enhancing their skills, thus enabling them to obtain
more job satisfaction, to gain higher rewards and to progress within the organization.
- Increase the commitment of employees by encouraging them to identify with the mission and
objectives of the organization.
- Help to manage change by providing people with the knowledge and skills they need to
adjust to new situations.
- Help to develop a positive culture in the organization, one for example, that is oriented
towards performance improvement.
- Provide higher levels of service to customers and hence greater customer satisfaction.
- Reduced costs and wastages.
- Competitive advantage.

Note: To get a better understanding of the meaning of training, it is important to distinguish

between training and related terms- education and development.
- Education is taken to mean general open learning and long-term learning activity aimed
at making people aware of their environment and preparing individuals for a variety of
roles in society (as citizens, workers and members of family groups). The focus of
education is primarily on the individual and his or her needs and secondly, on the
community as a whole i.e. on society’s needs which include need for respect of law and
order and need for variety of talents to sustain economic activities.
- Training is learning activity which is directed towards the acquisition of specific
knowledge and skills for purposes of an occupation or task i.e. to fit the individual into
the immediate position. Therefore, training will focus on immediate learning needs
related to current job or duties. Examples of training needs are: the need to have
efficiency and safety in the operation of particular machines or equipment, need for an
effective workforce and the need for competent management in the organization.
- Development is learning activity which is directed towards future needs rather than
present needs. The focus of development tends to be primarily on an organization’s
future manpower requirements, particularly for managerial group, and on the growth
needs of individuals in the workplace e.g. the need to develop employees to handle
challenging environmental conditions in technology and change management.
As noted, training is mainly tailored to improve job performance. This is done by helping the
staff to acquire knowledge, skills, attitude, experience and aptitude. Training is aimed at
achieving a number of gains like greater productivity and quality, reduce wastages, greater
versatility and adaptability to new methods, reduce accidents and enhance job satisfaction
among others. It is always desirable to attempt to validate a training course to see if any of
these results have been achieved.
Reasons for training are many:
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 - Training can be due to the need for induction in cases of new employees to orient them
to the organization e.g. on things like the mission, objectives, policies, rules and
regulations of the organization.
- It can be due to refreshment and this is referred to as refresher training aimed at
refreshing the employees’ minds and skills common in eliminating or reducing bad
work habits e.g. in the armed forces.
- Training can be remedial training as a result of the need to eliminate or reduce
identified performance deficiencies amongst employees.
- Training due to environmental changes e.g. change in technology necessitating
training to cope up with the changes, changes in the behavior of customers and socio-
cultural, and economic and legislative factors.
- Training for retirement or retrenchment as organizations are expected to be more
socially responsible to various stakeholders. They should be socially responsible to
their employees and expose them to training to enable them cope with new lives.
Therefore, factors influencing the quantity and quality of training and development activities
include:
- Degree of change in the external environment
- Degree of internal change- restructuring
- Availability of suitable skills within the existing workforce
- Adaptability of existing workforce
- The extent to which the organization supports the idea of internal career development.

6.2.1 Issues in Training

To understand how training should be developed and operated within an organization, the first
requirement is to appreciate learning theory and approaches to providing learning and
development opportunities.
Training approaches/issues
- Training philosophy i.e. the basis upon which training policies should be developed.
- The process of training- how criteria for effective training, systematic training
programmes and interventions can be planned, implemented and evaluated.
- Identifying training needs- establishing what type of training is required and ensuring
that it is relevant to the requirements of individuals and the organization.
- Planning training- deciding how the long and short-term training needs of the
organization and the teams and individuals working in it can be satisfied and selected
using training techniques.
- Conducting training- running training programmes for different categories of
employees.
- Responsibility for training- determining who plans and executes training programmes.
- Evaluating training- establishing the extent to which training is achieving objectives by
satisfying training needs.
Training Philosophy
The training policy of an organization expresses the degree of importance it attaches to
training. The policy statement sets out what the organization is prepared to do in terms of
developing its employees. Organizations with a positive training philosophy understand that
they live in a world where competitive advantage is achieved by having high-quality people
than other firms employ, and that this need will not be satisfied unless they invest in
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developing the skills and competence of their people. They also recognize that actual or
potential skills shortages can threaten their future prosperity and growth. Such firms persuade
themselves that training is an investment that will pay off. They understand that it may be
difficult to calculate the return on that investment, but they believe that the tangible and
intangible benefits of training will more than justify the cost.

The areas in which such a philosophy should be developed are:

- A strategic approach to training
Training takes a long term view of what skills, knowledge and levels of competence
employees of the company need. Training philosophy emphasizes that training and
development should be an integral part of the management process.
- Relevant
Training must be relevant in that it specifies identified and appropriate training needs.
- Problem-based
Training should be problem-based in the sense that it should be planned to fill gaps
between what people can do and what they need to do now and in the future. The
problem may be a negative one in the form of a weakness that needs to be remedied
or it may be positive because it refers to how the need to develop new skills or
enhance knowledge to meet future requirements will be satisfied.
- Action-oriented
Training philosophy should stress that training exists to make things happen, to get
people into action, and to ensure that they can do things they are doing now better or
will be able to do things they could not do before.
- Performance-related training
A performance-related training philosophy involves relating training specifically to
performance and competence requirements, for example, those following the
introduction of a new product, process or system.
- Continuous development
Training should not be regarded as simply the provision of short, isolated courses at
various points in a person’s career. Learning is a continuous process and a policy of
continuous development.
Training policies
Training policies are expressions of the training philosophy of the organization. They provide
guidelines of the amount of training that should be given (e.g. everyone in managerial,
professional, technical or supervisory positions should undergo at least five days’ formal
training every year), the proportion of funds that should be allocated to training, the scope and
aims of training schemes and the responsibility for training.

Immediately after employee orientation, training should begin. Training is a learning activity
which is directed towards the acquisition of specific knowledge or skills for purposes of an
occupation or task. Training means giving new or present employees the skills they need to
perform their jobs. Thus, training will focus on immediate learning needs related to the current
task or duties. Examples of training needs are the need to have efficiency and safety in the
operation of particular machines or equipment and need for an effective sales workforce.

Development is a learning activity which is directed towards future needs rather than present
needs. The focus of development tends to be primarily on an organization’s future manpower
requirements usually managerial group and on the growth needs of individuals in the work
32
place e.g. the need to develop employees to handle challenging environmental conditions in
technology and change management. Thus training is seen as an effort to fit the individual into
the immediate position while development is perceived as an effort directed towards future
growth.

Employee training involves a number of activities which together constitute a systematic

process referred to as the training cycle.

6.2.2 Systematic Training Cycle

Training process follows the following steps:
i. Training needs analysis (TNA)
ii. Developing training objectives based on the training needs analysis
iii. Designing a training programme
iv. Implementing the training programme
v. Evaluating training programme/follow up
This is what is referred to as the training cycle. It is important to note that training will be
effective to the extent that these steps are effectively managed.
i. Training needs analysis
Training must have a purpose (aim) and that purpose can be defined only if the
learning/training needs of the organization and the groups and individuals within it have been
systematically identified and analyzed. Training needs analysis (TNA) means efforts which are
aimed at identifying and defining any performance gap or shortfall in employee performance
or potential performance and therefore what has to be filled or remedied by appropriate
training. Thus training needs is the difference between what people know and can do and what
they should know and be able to do. Such a procedure will entail looking at training needs
from a number of different perspectives:
- The organization i.e. corporate requirement that may arise due to changes in the environment
exerting pressure for changes internally
- The department or function
- The job or occupational group
- The individual employees
Usually organizations analyze training needs in response to operational weaknesses reported
by line managers or to meet the demands of change.

Techniques/Methods of TNA
The sources for TNA include:
- Human resource plans
One of the outcomes of human resource planning is an indication of type of skills and
competencies that may be required in the future and the numbers of people with those skills
and competencies which will be needed. The plan will then indicate the training plan for the
organization’s human resources to ensure that the organization has people with the required
skills at all times.
- Job analysis i.e. examining in detail the content of the jobs- job description and
specifications.
- Performance appraisal.
This involves evaluation of the quantity and quality of the employees’ output to identify
strengths and weaknesses/deficiencies of the employees that need to be remedied. Performance
appraisal also enables identification of problems faced by the job holders e.g. lack of skills,
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knowledge and application of such knowledge and skills which needs to be rectified through
training.

Therefore to effectively identify training needs, the human resource experts should have
relevant and current data e.g. Data on human resource plans, job description, appraisal records
and previous training reports. HRM department can also carry out employee training needs
surveys and collect data through interviews from the job holders and their managers.
Questionnaires, meetings and focus group discussions can be used. Observation can be also
used by managers or experts e.g. trainers or other specialists- as the workers are working.
Note: TNA should reveal to us:
- The different types of deficiencies e.g. in skills, knowledge and in attitude.
- Identify the level/seriousness of those deficiencies and therefore indicate priority and what
needs emphasis.
- Indicate the behavioural change that is required, whether it is knowledge, attitude or skills
change. This will guide deciding the content of the training programme.

ii. Designing the training objectives

These are statements of specific and intended/desired outcomes of training activity. Good
training objectives must be action oriented and should be stated in measurable terms. Training
objectives should therefore state the standards or changes in behaviour on the job to be
achieved after the training. They indicate what the trainee will be able to do after the training
e.g. in terms of output or levels of accuracy or efficiency. Training objectives should logically
flow from the training needs.

Note: The functions of training objectives are:

- they describe the desired behavioural change.
- help determine the content of the training programme.
- show the sequences of the training i.e. from simple to complex or known to the unknown and
the coordination of the training programme to enable the firm achieve training objectives.
-Training objectives show the standards against which the employees will be evaluated once
they have gone through the training process.
However, besides the training objectives bringing out the performance component, they should
also bring out the conditions component i.e. the conditions under which the job is supposed to
be done e.g. availability of equipment, materials and the time within which the job has to be
done to achieve the expected performance.
iii. Designing a training programme
This involves:
- developing and classifying training contents i.e. the subject matter/curriculum.
- identifying places where the training will take place/where such content is available-
this may be an external institution such as college or university or attachment in
another institution or in the company, on which the job which may include teaching
and coaching by managers.
- Identifying the resource persons/trainers who are going to conduct the training.
- Identifying the training methodology e.g. lecture method, group discussions, role
plays- act practically the way it is done or demonstrations or field visits to organization
especially for internal training.
- Identifying and acquiring facilities e.g. equipments and machines, rooms and materials
that will be used in the training.

34
 - Determining the length and timetabling i.e. how long it will take and the scheduling of
training activities.
- Determining whether the organization has resources for the programme- the budget,
time and expertise.
- Choosing training methods/techniques.

The alternatives of training methods/techniques include:

a) Orientation/induction/socialization
Orienting new employees which is regarded as part of
training has three objectives:
- Learning about job procedures.
- Establishing relationships with co-workers including
subordinates and supervisors, and fitting into the
employers’ way of doing things.
- enable new employee develop realistic job
expectations- reduce reality shock and develop
positive attitude towards the employer and explain
what is available and what is not available. It also
meant to give employees a sense of belonging by
clarifying organizational objectives and policies and
showing how their jobs fit into the overall corporate
vision, mission and objectives.

Orientation often includes efforts to the relinquishing of

certain attitudes, values and behaviours. The new
recruit must learn the basic goals of the organization,
the preferred means by which these goals should be
attained, the basic responsibilities of the job, the
required behaviour patterns for effective performance
and a set of rules. They may also learn many of these
things from the co-workers and members of a work
group or team, but there should be a formal
orientation.
For this programme (orientation) to succeed:
- The presenters (managers in charge of various areas) should be knowledgeable and
enthusiastic.
- Requires top management’s commitment- this motivates middle managers to
participate and to send their new employees to the sessions.
- Follow up with participants to evaluate the programme and revise its contents based on
these evaluations.
- Orientation process should be continuous- it does not occur at one point but is achieved
more slowly and over time.
b) On-the job training.
This method means having a person learn a job by actually doing it. A typical on- the-
job training places the trainee in the real work situation where the experienced worker
or the supervisor gives job instructions, coaches or demonstrates the job and the tricks
of the job to the trainee. It also involves the new or inexperienced employees learning
through observing peers or managers performing the job or trying to imitate their

35
 behaviour.
On the job training avoids the major difficulties with off-the-job training e.g. lack of
practicability, relevance and reinforcement in the actual job situation. Literature offers
many example of managers who did well in formal class work but then made no
changes in their behaviours at work, thus on- the- job training is more effective. The
importance of a job or task, how it fits in with other tasks and other jobs and the
consequences of improper performance are usually far easier to demonstrate to the
trainee on the job. Thus Human Resource Managers must always ensure that more than
50% of the training employees get is on-the-job training since:
- It is effective.
- Cheaper- trainers learn while producing and there is no need for expensive off-site
facilities like class rooms.
- More realistic/practical i.e. does not go for unnecessary theories.
- Employees produce as they learn and if properly organized, on-the-job is more
motivating since employees see their results almost immediately.
Although on-the-job training can be inexpensive and simple, it has risks which include:
- damages and wastages.
- low quality and unsatisfied customers or less than optimal performance.
To be effective:
On-the-job trainers must be well trained themselves. They should be good performers on the
job and first, they should:
- be aware of the training techniques and should be made to get ready to teach the job.
- decide what the learner must be taught in order to do the job intelligently, effectively, safely
and economically.
- ensure they have the right tools.
- have work place properly arranged just as the worker will be expected to keep it.
Secondly, you have to put the learner at ease, find out what is already known about the job and
get the learner interested and desirous to learn the job.
Thirdly, tell, show, illustrate and question in order to put over the knowledge and operations to
make sure the learner really knows.
Fourth, supervisor should delegate enough authority to make the worker make decisions and
even mistakes- to create a climate for learning not only to provide opportunities to learn, but
also encourage a feeling of mutual confidence.
- Then test by having the learner perform the job, observe performance, correct errors and
repeat instructions if necessary until you are convinced the learner knows.
- Lastly, check frequently to be sure the instructions are being followed; give extra supervision
if necessary until the learner is qualified to work with minimal supervision.
c) Off-the-job training
These are techniques that involve formal training courses away from the place of work. These
are more common for management/professional development than they are for skills
development; and may involve returning to colleges or specialized centers and getting training
through lectures/talks, classroom instructions, group discussions, programmed instructions,
case analysis and simulation exercises. It also involves vestibule schools or institutions- these
schools owned by the organization for training their own staff e.g. Railway training school for
Kenya Railways and Bandari College for KPA. Many professionals associations also run
extensive training and development programmes. For this training to be effective there should
be interaction between the trainer and the trainee or among the trainees. The method can be
effective with the use of case-study methods to trainees where attempt is made to stimulate
36
real situations and to critique the ways trainees respond to the situation.
Thus in the use of case method:
-use actual problems of organizations.
- maximum involvement of participants in stating views and confronting other views and
making decisions.
- ensure minimal dependence on the presenters/trainers.
- create appropriate levels of participation.

d) Apprenticeships
Apprentice training combines on-the-job and off-the-job/class room training by attaching
the trainee to qualified expert who carries the training. Here the apprentice commits a
period of time of training and learning that involves both formal class room learning and
practicals for experience. This method is mainly used for training tradesmen or craftsmen
e.g. carpentry, vehicle mechanic, tailoring or electrical installation; and is done primarily
by Ministry of Labour through Directorate of Industrial Training. However apprenticeships
can be sponsored by individual companies or by groups of companies to suit their own
needs.
e) Simulations
A simulation is a training method that represents a real-life situation, allowing trainees to
see the outcomes of their decisions in an artificial environment.
Besides the above training methods, organizations also send their employees to special
courses, conferences, seminars and workshops to train their employees. They may also
invite consultants to their organizations to give lectures/talks meant to enable employees
develop certain skills.
iv) Implementation of training programme
This is ensuring that the training is conducted as planned. The most appropriate methods
are used to enable trainees to acquire the skills, knowledge and levels of competence and
attitudes they need. It is important to ensure that learning activities are progressing as
scheduled and resources are provided for as budgeted.
v) Training follow up and evaluation
There must be evaluation phase of the training (method) to determine whether the training
programme has achieved its intended objectives which were based on the TNA.
The evaluation should tell whether there is a change in the employees’ behaviour or work
performance. Evaluation also establishes if training resources were spent as planned.
Thus the reasons for evaluating training include determining:
- The strengths and weaknesses. This includes determining whether the programme is
meeting the learning objectives and the quality of the learning environment.
- Whether trainees are happy or satisfied with the training i.e. trainee reaction.
- Whether materials used in the training session teach the concepts specified and whether
learning has occurred.
- Whether concepts learnt are applied on the job i.e. behavioural change.
- Application of the concepts positively affect the organization i.e. results, and whether
the costs of training are offset by training benefits.
Thus there are three levels of training evaluation:
- the reaction level
This is where we simply wait to assess the employees’ reaction to the training
programme as to whether the training was well conducted and was beneficial. And also
determine how the training was conducted and whether the facilities were of quality.

37
 - the learning level evaluation
Here we assess how much learning has taken place e.g. cognitive, psychomotor and
affective/attitudinal learning. The participants are subjected to a test either oral or
written tests or observation of practical performance where we want to measure the
skills and change in behaviour. However, this does not inform us how much of that
learning will be transferred to the work place.
- The job behaviour level of evaluation
This can also be referred to as functional level. The importance of this is to tell how the
employees have transferred their learning to work environment. This therefore involves
evaluating the results of the training.

Note
As noted earlier, training is mainly tailored to improve job performance. This is done by
helping the staff to acquire knowledge, skills, attitudes, experience and aptitude. Training is
aimed at achieving a number of gains like greater productivity and quality, reduce wastages
and adaptability to the new methods, reduce accidents, and enhance job satisfaction among
others. Thus it is always desirable to attempt to validate a training course to see if any of these
results have been achieved.

For effective learning in the training, the principles of learning should be observed for example
motivation or positive reinforcement of the learners and structure of the content. Factors
influencing the quantity and quality of training activities include:
- Degree of change in the external environment
- Degree of internal change- e.g. restructuring
- Availability of suitable skills within the existing workforce
- Adaptability of the existing workforce
- Extent to which the organization supports the idea of internal career development
- Availability of financial resources

Topic Summary
We have now come to the end of topic six. In this topic, we learned about employee
orientation and training. Employee orientation is a procedure for receiving and providing new
employees with the basic background information about the firm to enable them settle down
quickly and start working. Training is learning activity which is directed towards the
acquisition of specific knowledge and skills for purposes of an occupation or task to enhance
efficiency and performance.
Orientation helps the new employee feel welcome and part of the organization, acquainting the
new employees to the environment, company rules and regulations, creating a positive first
impression to new employees and clarifying the organization’s mission, objectives, structure
and work processes. Effective training can improve employee skills and levels of competence,
enhance their operational flexibility by extending the range of skills, attract high quality
employees by offering them learning and development opportunities, provide higher levels of
service to customers and hence greater customer satisfaction.

Orientation may be done through lecture sessions, employee hand books – where all the
organization’s rules are written, organizational tours and group seminars. Methods of
employee training include on-the-job training, off-the-job training, apprenticeships and
38
simulations.

Training process involves training needs analysis, developing training objectives based on the
training needs analysis, designing a training programme, implementing the training
programme and evaluating training programme/follow up.

Glossary
Orientation- Procedure for receiving and providing new employees with the basic background
information about the organization to enable him/her settle down quickly and start working.
Training- Learning activity which is directed towards the acquisition of specific knowledge
and skills for purposes of current job or duties.
Development- Development is learning activity which is directed towards future needs rather
than present needs. The focus of development tends to be primarily on an organization’s future
manpower requirements, by the need to developing employees to handle challenging
environmental conditions in technology and change management.

TOPIC ACTIVITIES

Activity
The Managing Director of your company has requested you to prepare a presentation to the
Board of Directors on the significance of investing in training of the organization’s employees.
Discuss what you would include in your presentation.
Assignment
i. Distinguish between training and development.
ii. Discuss how you would go about identifying training needs in an organization.
iii. Describe employee training methods.

TOPIC SEVEN
PERFORMANCE APPRAISAL
Introduction
Welcome to Topic Seven. In Topic Six we learned that employee orientation and training in
critical to enable employee fit into their jobs and improve their performance. In this topic, we
will study employee performance appraisal. The results of performance appraisal are useful in
making decisions on various human resource management aspects such as recruitment,
training and compensation. Thus, this topic focuses on nature and purpose of performance
appraisal, principles of performance appraisal and methods of appraising employee
performance.

39
Learning Outcomes
By the end of this topic you should be able to:
i. Describe nature and purpose of employee performance appraisal.
ii. Discuss the principles of performance appraisal.
iii. Describe performance appraisal methods

Topic Content
7.1 Nature of Performance Appraisal
Performance appraisal (PA) is the process of assessing (reviewing and evaluating) the
employee’s level of performance both in terms of quantity and quality of output. Purpose of
conducting PA is to:
 Determine ways of developing the employees to ensure better or improved contribution
to the organization.
 Ascertain the employee worth to the organization and potential for development.
 Determine if the employee needs extra compensation either to induce him to work
better or to reward his recommendable performance e.g. salary increment or promotion.
 Provide feedback information on employee’s weaknesses as well as strengths and
consequently room for improvement i.e. it will point out specific needs for training and
development.
 Aid in predicting the performance of job applicants because through performance
appraisal, the organization will know how various kinds of people perform. This can
aid decision such recruitment, placement and special assignments such as committees
and tasks.
 Motivate employees by providing them with a feedback of the organization’s view of
their performance and thus encouraging them to work harder in-order to win a
favorable rating.
 Demotion, separation e.g. through redundancies and early retirements.
Note
It is important to emphasize that:-
i. PA is important in developing the organization’s HR and enhancing organizational
effectiveness.
ii. PA is not an end in itself but rather the means to achieve a higher productivity and
organizational effectiveness.
iii. To realize these benefits PA must be comprehensive and a continuous exercise and
not an event that happens once a year or even never conducted.
Participants in the PA
In most organizations, the HR department is responsible for conducting the design and
implementation of PA programmes. The HR department provides advisory services, keeps all
the records of PA, interprets the records and helps in the relevant personnel decisions such as
promotion, demotion, training and development and transfer.
Others who participate in performance appraisal include:
i. A staff appraisal committee whose members are picked from various departments
whose main responsibility is usually to review and also monitor the exercise, solve any
conflicts and also act as a linkage between the HR department and other line

40
 departments.
ii. Can also have external consultants to do the PA for the organization. However this will
create fear that you don’t trust your reporting officers and their information.
In most organizations, the following provide information used in conducting PA:

i. The immediate boss/supervisor of the appraiser because he/she is the one who
supervises the employee throughout the year.
ii. The appraisee himself/herself so that the exercise can provide feedback to the
job performer for improvement and development. However, this is not done
well as most employers/ managers do not like involving the appraisee.
iii. The head of department i.e. the boss of the appraisee’s immediate boss to check
on its accuracy and consistency and where necessary seek clarification from
appraiser and consequently approve the appraisal before it is taken to the HR
Department.
iv. A staff appraisal committee whose members are picked from various
departments whose main responsibility is usually to review and also monitor
the exercise, solve any conflicts and also act as a linkage between the HR
department and other line departments.
v. Any person who may have worked with the appraisee for example, on special
assignments or routine jobs e.g. manager and a driver who drives him.
vi. In some circumstances the following would also contribute to PA:-
 The colleagues of the appraiser e.g. in the department, however, this should be
objectively done.
 The subordinates
The people the appraisee is supervising; however must be carefully done as this
can create unnecessary sensitivity.
 The customers can also be involved especially in the market e.g. observing
things like complaints and compliments from the customers e.g. in banks &
student evaluation.
7.2 Principles of Performance Appraisal
There are certain principles which lay the foundation of effective PA
i. The employee PA scheme should be fully discussed by all levels of the organization
workforce before its implementation. During the discussion, the employee should be
made to understand the rationale behind the scheme, its necessity and importance to
them and to the organization as a whole and what is expected from them in their tasks.
ii. The criteria to be employed in PA should be agreed upon by the supervisor and the
employee whose performance is to be evaluated.
iii. The basic objectives of PA scheme should be thoroughly understood by those
administering it. They should also be given proper coaching on the skills and
techniques involved in the exercise.
iv. The appraisal should be confined to the behavior of the individual at work. PA is on
the job performed and not the job performer. Therefore evaluation should be
restricted to activities or behaviour that affect their performance and this should be
done on the basis of sufficient information. Activities that do not have a bearing on
the individual’s performance e.g. mode of dressing should not be evaluated in the PA
exercise.

41
 v. Honesty is not to be overlooked in the performance appraisal exercise.
vi. Emphasis should be based on the most recent cases since they are more vivid on the
employee’s memory. This is on the fact that feedback is more effective when
immediate. The report should only deal with the employee’s performance covering
the period since the last performance report. It thus follows that contents of previous
reports are not of assistance in drawing the present report and should not be consulted
in advance. Consulting would only lead to bias on the part of the reporting officer.
vii. In PA, actual weaknesses of the employee and those emanating from special
circumstances beyond his control should be distinguished e.g. low performance may
be as a result of ill-health, domestic problems and inadequate product material, but
not necessarily employee’s incompetence.
viii. The immediate boss of an appraisee is likely to know the detail of the latter’s
performance results and potentials. As such, the immediate boss should actually write
the appraisee’s performance report.
ix. Appraisal information or report contents should only be given to the employee and
those authorized to have it. The contents should be discussed fully with the employee
so as to enable him accept his/her strengths and weakness.
x. Employee PA should be a continuous exercise. Not a one year event. This ensures
continuous feedback and consequently continuous improvement.
xi. Weaknesses and strengths of employee should be displayed in performance appraisal.
Suggestion on reinforcing the appraisee’s positive elements and amending his
negative side should be brought forward.
xii. Since PA is a learning exercise, it should be treated as such for both the supervisor
and appraise.
xiii. The appraisal reports should not just be taken and stored away. The managers should
make use of them so as to improve the employee’s performance and enhance
personal development. Also there should not be implied appraisals i.e. implying
existence of an appraisal that was never done. This does not contribute at all to the
development of employees and achievement of employee and organizational
performance goals.
xiv. The employees concerned should be consulted in preparing job description which the
performance appraisal report is based. This is to ensure that the activities and
responsibilities involved are well understood by the employee.
xv. The reporting officer’s immediate boss should counter-sign the report and make any
necessary comments as an indication that he accepts the contents of the report.
xvi. The procedure used to appraise should be objective, uniform and consistent so that
they are not biased and some people do not take advantage of it. The tools to be used
also need to be clear, simple so that the appraisers can understand and use them
effectively.
7.3 Steps in Appraising Performance
Effective appraisal is a process which involves a number of steps:
First, is to define the employees’ job and performance criteria. Defining the job means making
sure the manager and the subordinate agree on the subordinate’s duties and job standards and
on the appraisal method to be used.

Then, sometime later, appraising performance means comparing the subordinate’s actual
performance to the standards; this usually involves some rating form.
42
Finally, an effective appraisal requires a feedback session. Here, the manager and the
subordinate discuss the subordinate’s performance and progress, and make plans for any
development required

The manager/supervisor generally conducts the actual appraisal using predetermined and
formal tools (appraisal forms). The two basic questions in designing the actual appraisal tool
are what to measure and how to measure it. For example, in terms of what to measure, we may
measure the employee’s performance in terms of generic dimensions such as quality and
timeliness of work, or with respect to achieving specific goals. In terms of how to measure it,
there are various methodologies/techniques. In the following section, we will learn the
techniques of performance appraisal.

7.4 Performance Appraisal Techniques

The following are some of the techniques used in conducting performance appraisals. The
methods used vary with organizations.
i. The ranking methods
Here the employees are ranked from the highest to the lowest on each trait you
want to rank them.
ii. Forced distribution
You place predetermined percentages of rates into performance categories for
example, you may decide to distribute employees as follows:
5% Top performers
15% High performers
20% High-average performers
30% Average performers
20% Low-average performers
15% Low performers and
10% bottom performers- who are given time to improve or transfer them.

iii. Written /Narrative methods

Essay or free form technique
The supervisor writes an essay on his assessment of his subordinates describing
past performance and behavior of the employee and required areas of improvement
(how to improve that performance).
This aids the employee in understanding where his/ her performance was good or
bad and how to improve that performance.
iv. Improved essay
Here the supervisor writes an essay on provided sub-topics such as knowledge of
work, leadership ability, technical effectiveness, strengths and weaknesses, and
development needs etc.
v. Critical incident
Supervisor keeps a record of uncommonly good/positive and undesirable/negative
incidents of an employee’s work related behavior. Then the supervisor and
subordinate occasionally meet to discuss the subordinate’s performance using the
incidents as examples. However, it is useful to record/accumulate incidents that are
tied to the employee’s goals.
vi. Field review
43
 Here the HR specialist literary goes to the field and conducts informal interviews
with supervisors at their place of work on areas where the employee has impressed
the supervisor.
vii. Graphic rating scale method
This is the simplest and widely used method for appraising performance. The
method consists of a list of certain traits/qualities or characteristics to be rated e.g.
job knowledge, quality, dependability, creativity and innovativeness, leadership
skills etc and a range of performance values and the supervisor rates each
subordinate by circling the score that best describes his/her performance for each
trait. The assigned values for the traits are then totaled.

viii. Weighted checklist method

It includes list of statements of questions developed and used to rate the job
performance of employees. The rater simply responds by ticking the appropriate
statements or questions for each employee e.g.

ix. Behaviourally anchored rating scale

(BARS)
The method combines the benefits of narratives, critical incidents and graphic
rating scales by anchoring a rating scale with specific examples of good or poor
performance. Its proponents say it provides a better more equitable appraisal.
Developing BARS typically requires five steps
i. Generate critical incidents
Ask the person who knows the job (job holders and/or supervisor) to describe specific
illustrations (critical incidents) of effective and ineffective performance.
ii. Develop performance dimensions; define each dimension such as salesmanship
skills and have these people group the incidents into 5 to 10 dimensions.
iii. Reallocate incidents
To verify these groupings, have another group of people who also know the job
reallocate the original critical incidents and reassign each incident to the cluster they
think it fits best. Retain a critical incident if some percentages (usually 50% to 80%) of
this second group assign it to the same cluster as did the first group.
iv. Scale the incidents
This second group then rates the behavior described by the incident as to how
effectively or ineffectively it represents performance on the dimension (7 - 9 point
scales are typical)
v. Develop a final instrument. Choose about six or seven of the incidents as the
dimensions behavioural anchors.
Advantages of BARS
Though more time consuming than other appraisal tools BARS seems to have some
advantages:
- Is a more accurate gauge- produces a good gauge of job performance- people who know
and understand the job and its requirements prepare BARS
- Clear standards- The critical incidents along the scale make clear what to look for in terms
of superior performance, average performance etc.
- Feedback- the critical incidents make it easier to explain the ratings to appraisees.
- Independent dimensions: systematically clustering the critical incidents to 5 or 6

44
 performance dimensions (e.g. salesmanship skills) should make the performance
dimensions more independent of one another. E.g. a rater should be less likely to rate an
employee high on all dimensions simply because he/she was rated high in salesmanship
skills.
- Consistency
BARS- based evaluations also seem to be relatively consistent and reliable, in that
different raters’ appraisals of the same person tend to be similar.

7.5 Problems Encountered in Performance Appraisal

i. Lack of objectivity- personal bias
Studies have shown that evaluator’s biases can influence their evaluation of employees. If
evaluators like certain employees better than others, this can influence the rating they give.
This problem is related to prejudices against certain groups of people. Lack of objectivity is
usually a problem especially in rating employees on factors such as attitude, loyalty and
personality which are difficult to measure objectively. This problem can be reduced by rater
training and careful monitoring of the patterns of evaluation to find out inconsistency.
However, some subjectivity will always exist.
ii. Central tendency
Central tendency is a common error that occurs when some raters are reluctant to rate people at
the outer ends of the scale resulting in majority of the employees being rated near the middle
or average to avoid possible controversy or criticism by giving average rating. Often this
problem is caused by lack of knowledge of the behaviour of the people being rated or when the
rating scale system requires the evaluator to justify in writing extremely high or extremely low
rating. The problem can be reduced by using behaviour adhered techniques. Ranking
employees can reduce the problem since in ranking you cannot rate them as average.
iii. Recent behaviours
One difficulty with many of the evaluation systems is the time frame of the behaviour being
evaluated. Sometimes instead of managers appraising the ratee fairly over the entire period,
they (evaluators) tend to forget more about past behaviour and only remember some good or
bad things one did recently e.g. recent disagreement between the boss and the subordinate
although the performance of the worker was there before very good. Thus people are
sometimes only evaluated of the results of the recent weeks than over 6 or 12 months average
behaviour. Also since every employee may know when he is scheduled for a performance
review the employee can improve his behaviour and productivity days or weeks before the
scheduled evaluation. Naturally the evaluator may remember the recent behaviour than actions
from the more distant past. To overcome this problem, management should ensure that PA
covers a specific period (e.g. six months or a whole year) and an individual’s performance
should be considered.
iv. Halo effect
This appears in PA when the evaluators perceive one factor as having paramount importance
and gives a good or bad overall rating to an employee based on this one factor. For example,
an accounting supervisor may place value on neatness when appraising his subordinates. Thus
a neat employee will receive a better overall rating on performance than he/she deserves or a
supervisor may rate unfriendly employees lower on all traits rather than just for the trait ‘gets
along well with others’.
v. Many managers fear or dislike face to face confrontation with their subordinates.
Some are also psychologically defensive. Performance appraisal has been viewed similar to
court trials and judgement passing i.e. some bosses use PA as a tool for condemning their staff
45
and do not involve the appraisee making the whole thing one-sided due to lack employee
participation.
PA has also been reduced to merely salary discussions thus ignoring its other important
objectives.
- Lack of job description which is the yardstick against which PA should be conducted.
- PA is seen as a once - a - year event- they wait until the end of the year to do it.
- Lack of sufficient knowledge and skills for conducting effective PA interviews and
lack of communication skills. Problem can occur if the evaluator (usually supervisors)
are not well trained or lack commitment to the exercise more so if they do not see the
benefits derived from PA.
To overcome these problems, management should educate all those involved in PA- the
objectives of PA and what is expected of them and make PA be a continuous exercise. For
the appraisal to work well, the employees must understand it, must feel it is fair and must
be committed to its success. One way to foster this understanding is for the employees to
participate in PA system design and be trained in some extent in performance appraisal.

vi. Differences in standard of evaluation

Problem with standard of evaluation may also arise because of perceptual differences in the
meaning of the evaluation words. For example, words like ‘good’, ‘adequate’, ‘satisfactory’,
‘excellence’, and ‘quality of work’ may mean different things to different people. This error
arises mostly in graphic rating scales but may also come from essays and critical incidents
methods. Careful training of evaluators and use of appraisal techniques that are less prove to
this problem e.g. rating as below average, average and above average behaviour can reduce the
margin of error.
The tendency to evaluate employees higher than they should be has also been observed
particularly where negative evaluation must be explained to the employees concerned.
Proper training and monitoring of evaluation process can help reduce this problem.

Source: http://www.menaitech.com/blog/performance-appraisal-system-in-dubai/
Topic Summary
We have come to the end of Topic Seven. In this topic we have learnt employee performance
appraisal. We have learnt that Performance appraisal is the process of assessing the
employee’s level of performance both in terms of quantity and quality of output. Results of
performance appraisal are useful in understanding employee strengths and weaknesses which
is important in making HRM decisions such as employee promotion, compensation,

46
recruitment and training.
To achieve the desired benefits, performance appraisal should be guided by basic principles:
Appraisal scheme should be fully discussed, understood and agreed by all levels of the
organization workforce and those administering it, the appraisal should be confined to the
behaviour of the individual at work, honesty should not be overlooked in the appraisal exercise
and the appraisal should be continuous.
Performance appraisal methods include ranking method, forced distribution, narrative method,
improved essay method, critical incident, field review, graphic rating scale, weighted checklist
method and behaviourally anchored rating scale.

Glossary
Performance appraisal- Process of assessing the employee’s level of performance both in
terms of quantity and quality of output.

TOPIC ACTIVITIES

Activity
Using suitable examples, describe performance appraisal practices in Kenyan organizations.
Assignment
i. Describe performance appraisal.
ii. Discuss the purpose of performance appraisal.
iii. Human resource management practitioners assert that performance appraisal is poorly
performed in many organizations. Using suitable examples, explain the possible reasons for
this assertion.
iv. Explain how performance appraisal should be conducted to enhance its usefulness in
organizations.

47
 TOPIC EIGHT
COMPENSATION MANAGEMENT

Introduction
Welcome to Topic Eight. In Topic Seven we learned about employee performance appraisal.
We learnt that one of the purposes of performance appraisals is to aid in making decisions on
employee compensation. In this topic we are going to study compensation management.
Effective employee compensation is important to attract, motivate and retain quality
employees. We will study the forms of compensation, compensation policy, importance of
compensation and factors which influence an organization’s compensation strategy.

48
Source: http://www.cartoonresource.com/archive/business/employee-compensation/brg117-
ts.aspx
Learning Outcomes
By the end of this topic you should be able to:
i. Describe employee compensation
ii. Explain the importance of employee compensation
ii. Describe the factors which influence employee compensation.

Topic Content
8.1 Nature of Compensation
Employee compensation refers to all forms of pay or rewards going to employees and arising
from their employment. Compensation management (system) consists of an organization’s
integrated policies, processes and practices for determining, controlling and monitoring the
rewards (salaries, wages and benefits) paid to employees in accordance with their contribution,
skills and competence, and market worth.
Employee compensation system is developed within the framework of the organization’s
compensation philosophy, strategies and policies, and contains arrangements in the form of
processes (how), practices, structures and procedures which will provide and maintain
appropriate types of pay, benefits and other types of rewards.

Components of compensation systems

A compensation system consist of financial rewards (direct financial payments)- salaries,
wages, commissions and bonuses, and employee benefits (indirect payments) such as medical
cover, retirement benefits, education grants etc which together comprise total remuneration.

Note: Salary is a fixed payment to a full-time employee. It is usually expressed in annual

terms, implying relatively permanent employment relationship though normally paid at

49
monthly intervals and covers even weekends and offs. Wage is a payment made to temporary
workers. It is usually paid for the work done and expressed as a rate per hour/day especially
for manual workers. For salaries and wages, we have what is referred to as base or basic pay,
which is the fixed salary or wage which constitutes the rate for the job. For manual workers, it
may be referred to as time or day rate. Basic pay provides a platform for determining
additional payments related to performance, competence or skill. It also governs pension
entitlements and life insurance when they are related to pay. The basic levels of pay for jobs
reflect both internal and external relativities. The internal relativities may be measured by
some form of job evaluation which places jobs in a hierarchy; and external relativities are
assessed by tracking market rates.

The base rate for a job is regarded as the rate for a competent or skilled person in a job, and
this rate may be varied according to the individual’s skills or competence. The rates are fixed
by managerial judgment of what is required to recruit and retain people. However, they may be
adjusted in response to individual negotiation and collective pressure through trade unions for
increases or upgrading. Such levels of pay may thus be agreed upon and upgraded through
negotiation (collectively bargaining with trade unions) or by individual agreements or by
management in response to movements in market rates and inflation.

Besides the basic pay, other additional rewards may be provided which are related to
performance, skill, competence or experience. This additional pay may include:
- Bonuses- rewards for successful performance, which are paid to reward results
obtained by individuals or teams
- Commission- a special form of incentive in which payments to sales representatives are
made on the basis of a percentage of the sales they generate
- Allowances- these are elements of pay that are provided as a separate sum of money
for aspects of employment such as house allowance, commuting allowance or hardship
allowance- for working in hardship areas.
Thus total earnings- the amount of money paid to the employee or placed in an employee’s
pay package are calculated as the sum of base pay and any additional payments.

Employee benefits, also known as indirect pay include:

- payments made for time not worked e.g. paid leave such as annual leave, sick leave,
sabbatical leave, compassionate leave, days off, weekends and public holidays.
- Insurance benefits e.g. health insurance- accident/injury insurance or life insurance.
- Retirements benefits e.g. mandatory pension e.g. National Insurance Security Fund
(NSSF) and other pension plans, and gratuity- normally paid to those who work on
contract e.g. 25% of the basic pay.
- Allowances such as house, travelling, entertainment allowances, telephone allowances
etc.
- Educational grants and sponsorship of both employees as well as their dependants.
- Loans and mortgages- either through purchasing properties or even taking things on
credit, at factory prices or negotiated rates.
- Medical cover for employees and even their immediate family members- out-patient
and in-patient cover, some organizations will cover all the medical expenses.
- Subsidized meals in the organization’s canteens.
- Performance incentives such as gifts and Christmas parties.
Benefits comprise elements of remuneration given in addition to the various forms of cash
50
 pay and also include provisions for employees which are not strictly remuneration such as
annual holidays. Therefore total remuneration is the value of cash payments (total
earnings) and benefits received by employees.

The single most important obligation owed by an employer to an employee is to pay him
or her wages. The fulfilment of this duty involves most employers in the biggest expense
of their businesses. Typically wages, salaries and related costs make up about 60% - 80%
of the total costs of running an organization. This raises the question as to why would an
organization be willing to incur huge expenditures on compensation of its employees? The
huge expenditures on employee compensation is important because HRM views that a
good salaries and benefits plan is necessary to enable an organization:
- Attract the right quantity and quality employees in terms of education, professional
training, experience etc.
- Retain the staff in the organization once they have been absorbed.
- Motivate the staff and consequently improve their work performance and performance
of the organization.
- Compete favourably with what is in the job market- should be competitive enough
compared to other organizations or industries with more less the same jobs
- Adapt to environmental changes that affect employees’ income e.g. inflation.
- Achieve good relationship with the organization’s stakeholders such as shareholders,
employees and the government as the custodian of the legal and labour guidelines.
- Be perceived as being reasonable within its framework of impartiality and equity- there
should be equity of salary among people with similar qualifications doing similar jobs
i.e. equity theory of motivation.
8.2 Compensation Policy
Reward policy provides guidelines for decision making and action. It may include statements
of guiding principles or common purposes.
As noted earlier the main purpose of good employee compensation and thus purpose of having
a good salary and wage administration in an organization is to:
- attract sufficient and suitable employees (right numbers and skills).
- retain employees who are satisfied.
- reward employees for effort, loyalty, experience and achievement and thus motivate
the employees.
These purposes have to be achieved within an agreed budget for wages, salaries and other
related payments. There are considerable variations in what organizations have to pay to
ensure that they attract, retain and motivate sufficient staff.
The two most significant factors that help explain pay variations across organizations are:
- the state of the labour market and
- the nature of their operations
For example organizations operating in a competitive labour market, find that they have to pay
a higher price for labour, than those operating in a market characterized by a labour surplus i.e.
high unemployment. The nature of the organization’s work determines its requirements for
particular categories of employees. Hence organizations requiring relatively unskilled
employees are usually able to pay lower wages than those whose operations require skilled or
professional grades of employees.
In practice, wages and salaries will be paid for one or more of the following reasons:
- to fulfil legal obligations- the ‘minimum’ reason
- To obtain a sufficient share of the relevant labour market- the competitive reason
51
 - To provide a fair reward to those performing specified roles- the equitable reason
- To provide an incentive for employees- the ‘motivational’ reason
- To keep pace with inflation- the cost of living reason
Organizations that can acquire labour by paying the bare minimum are free merely to meet
their legal obligations under the employment contract. Every organization however, has to
compete in some extent in the labour markets. Employers seeking staff who are in scarce
supply will find themselves bidding up against other employers in order to secure sufficient
numbers of new recruits.
Once staff has been recruited, the employer needs to ensure that there are appropriate
differentials and other rewards aimed at achieving fairness in pay in relation to effort
responsibility and other factors. In addition to questions of fairness, many organizations find
that monetary incentives are needed in order to encourage employees to put in extra effort.
Further, all employers are faced with protecting their employees against the effects of inflation
in the economy, so as to at least maintain the purchasing power of individual salaries and pay
packets. Thus compensation policy addresses such issues as the following:
- Whether the organization’s rate should be above, below or equal to the on-going rates
in the industry or within the job market. As a general trend private sector tends to offer
higher packages to attract manpower from the public sector which is the biggest
employer.
- The minimum levels at which new employees are engaged.
- The pay differentials/intervals within a job grade and also between consecutive job
grades and also between consecutive job grades. For example, if it is a job grade 1,
there will be a minimum and maximum salary e.g. Ksh. 5000 - 7500 and in between
there are incremental guidelines e.g. Ksh. 350 every year or it will vary depending on
for example, job performance or professional qualifications.
- As people go higher in the job grade, the increments will also be higher. And salary
scales of job grades overlap as you may find maximum salary of a grade extending in
the scale of the next higher grade.
- The extent to which and circumstances in which individuals or categories of employees
can negotiate their basic pay and allowances- which deviates from the established
structure and thus violate the principle of internal equity. Organizations may give
allowances for negotiation of salary in some professions but will still have wage
guidelines.
- The level of confidentiality of pay or how much should be published about reward
policies and practices. In some organizations it is confidential, but in some, it is not a
secret.
- Flexibility of pay structure due to changes in the environment e.g. inflation or internal
changes such as restructuring.
- The frequency of salaries and benefits review i.e. how frequent the organization will
conduct salary review due to environmental changes.
- The extent to which the organization believes in sharing successful performance with
employers e.g. in form of bonuses.
- The types and levels of employee benefits to be provided and the extent to which
employees can choose the benefits they want e.g. between house allowances and
housing.
- The mix of total rewards between basic pay, additional pay e.g. bonuses and
commissions and benefits and the use of non-financial rewards.

52
8.3 Factors Affecting Employee Compensation
Compensation systems are subject to major influences from external forces. The external
influences, combined with internal issues such as productivity produce a background against
which to construct an effective compensation system. These factors include:
i) Ability to pay
Organizations vary in their ability to meet their wage and salary commitments. This depends
on an organization’s resources. To a large extent in the case of private organizations, that
ability comes from profits, revenue collected through taxation in public sector and donations in
the case of NGOs. Thus when donors reduce their contributions, it affects employees. Firms
which are profitable and which enjoy a good cash flow will find it easier to be generous to
their employees. Those which are struggling for survival will find it difficult to meet even their
minimum obligations. Both prosperous and poor organizations still have to decide how much
of their revenues to set aside for labour costs (employee compensation) in comparison with
amounts required for investment for example, in plant and machinery.
ii) Government guidelines and regulations which are in force
Over the years, governments have intervened actively in pay issues. Governments have
legislations to protect particular groups of employees by keeping wage levels within defined
limits e.g. by setting low wage guidelines. Also through tripartite agreements the government
plays a role of letting employees and employers to negotiate terms of work.
iii) Conditions in the labour market
The supply and demand for labour in the market in which the firm is drawing upon is an
important consideration. Certain skills are always in short supply, even when labour in general
is plentiful and organizations seeking to recruit persons with these scarce skills will have to
pay a premium. Where the skills sought are in surplus and thus the supply is more than the
demand especially for semi or unskilled workers, then the employer (recruiting organization)
is in an advantageous situation and can decide to offer lower salaries.
iv) Comparability- prevailing wages and salary with comparable jobs in comparable
organizations and industries. Both employers and trade unions are bound to consider what
comparable jobs are being paid elsewhere. A firm will look at its industry to see what rates are
being paid and the public sector tends to look at the private sector comparisons.
v) Compensation theories and their application e.g. the equity theory where employees
compare/ equate their inputs to the organization e.g. training, experience and effort, and output
e.g. salary and benefits gained from the organization with those of comparable others. Thus
employers try to set their compensation to a level that reduces inequity among employees.
vi) Collective bargaining ability of workers representatives
The ability of the trade union to influence compensation decisions depends on its bargaining
power. The employers also have their own collective bargaining ability through the Federation
of Kenya Employers (FKE). If the employer’s need for labour is desperate and if the skills the
organization requires are scarce, then other things being equal, the trade union’s position will
be very strong in pressing for higher salary for its members and vice versa.
vii) The bargaining power of individuals- some individuals are better bargainers. But also
bargaining power of individuals depends on the availability of these professionals, seniority,
experience etc.
viii) The cost of living- changes in consumer price index
When the cost of living is high i.e. when inflation is rising eroding the purchasing power of
employees, there is enormous pressure on employers to raise wages and salaries (by the rate of
inflation) to restore the employees purchasing power.
ix) General environmental factors

53
An organization’s pay is also influenced by the state of the economy and level of economic
activity. Thus if there is prosperity and there are markets for goods and services, employers
can yield to demands for higher wages and salaries to enhance productivity.
x) The organization’s compensation policies.
xi) Organizational/environmental change
An organization which is in a relatively stable condition, both internally and in the external
environment, is able to implement its pay and salary policy with relative ease. Conversely, an
organization undergoing massive change, perhaps as a result of market pressures or of
technological change, will probably find that it has to completely restructure its payment
systems for example, due to demand for new skills or new job definitions.
x) Job analysis and job evaluation results

Topic Summary
We have come to the end of Topic Eight. In this topic, we have learned that employee
compensation consists of financial rewards (direct financial payments and employee benefits
(indirect payments).We have also learnt that the purpose of employee compensation is to
attract, retain and motivate required quantity and quality of employee. Internal and external
factors influence an organization’s compensation strategy.

Glossary
Compensation policy- Statements of guiding principles which provides guidelines for
decision making and action in salary administration. It may include
Employee Compensation- All forms of pay or rewards going to employees and arising from
their employment.

TOPIC ACTIVITIES
Activity
Assume the organization you are working for has asked you to develop a sound wage and
salary administration policy for the organization. Explain what you would include in the
policy.
Assignment
i. Describe the various forms of employee compensation
ii. Explain the benefits to an organization with a good compensation policy.
iii. Discuss the challenges organizations face in developing and implementing a good
compensation policy.
iv. Discuss any four factors you would consider in developing the policy.

TOPIC NINE
EMPLOYEE SEPARATION

Introduction

Welcome to Topic Nine. In topic eight, we studied employee compensation. We learnt that the
54
purpose is to attract, motivate and retain quality employees. However, for various reasons
employers and employees separate. In this topic, we focus on employee separation. We will
study the nature of separation and various ways in which employers and employees separate.

Source: http://work.chron.com/hr-report-job-separation-16883.html
Learning Outcomes
By the end of this topic you should be able to:
i. Discuss types of separation.
ii. Discuss the reasons for separation.
Topic Content
9.1 Nature of Employee Separation
The goal of human resource managers is always to attract and retain employees with particular
skills and talents to stay with the organization. This may be achieved by offering better
resources, greater job challenge, promotion and financial incentives. However, employees exit
organizations for various reasons hence, employers and employees separate through:
- Involuntary turnover
- Voluntary turnover
9.2 Involuntary Turnover
Involuntary turnover reflects a separation initiated by the organization, often when the
individual would prefer to stay as a member of the organization. Involuntary turnover may be a
result of the following:
i. Dismissals
The main grounds for dismissals include:
- Unsatisfactory performance i.e. persistent failure to perform assigned duties or to meet
prescribed standards on the job which may be attributed to absenteeism, tardiness or
adverse attitude toward the company, supervisor or fellow employees.
- Misconduct i.e. deliberate and willful violation of the employer’s rules, and may
include stealing, rowdy behaviour and insubordination- willful disregard or
disobedience of the boss’ authority or legitimate orders or criticizing the boss in public,
disregard of reasonable instructions, display of disrespect making insolvent comments,
disregarding the chain of command shown by going around the immediate or manager
55
 with a complaint suggestion or political manoeuvre and participation in an effort to
undermine and remove the boss from power. When an employee is dismissed, the
organization needs to have proper procedures and the affected individuals need to be
given full explanations of why and how termination procedures were made to perceive
the dismissal as fair.
ii. Retirement
Once employees have reached the statutory retirement age usually 60 - 65 years, an
organization is entitled to enforce their retirement. Retirement for many employees is a
mixed blessing. The employee may be free of the daily requirements of his/her job, but at
the same time be slightly a drift because of not having a job. Some employers have a
preretirement counselling e.g. on finance and investments aimed at easing the passage of
their employees into retirement. Some organizations offer part-time employment to
employees as an alternative to outright retirement.
iii. Ill health
This is where some employees may have to be dismissed because they are no longer
capable on health grounds of performing their job responsibilities. Such employees may or
may not be given financial help by the organization.
iii. Lack of qualification for the job
This occurs especially when organizational restructuring takes place and jobs are
redesigned requiring specific skills.
Involuntary turnover should be managed well in a manner that promotes feelings of
procedural justice and therefore do not invite retaliatory reactions and voluntary turnover
among high performers.

9.3 Fairness in Dismissals

Dismissals are never pleasant. However, there are three things managers can do to make sure
they are fair. First, the manager should give the affected individuals should be given full
explanations of why and how termination decisions were made to perceive the lay off to be
fair. Second, managers should institute a formal procedure (including warning) and provision
of a neutral process. Third, who actually does the downsizing is important. Thus, managers
should inform the subordinate of an impending layoff in a diplomatic approach for the
subordinate to view fairness in the dismissal. Managers should have an in-person meeting to
announce the downsizing rather than say, using e-mail to fire employees.

9.4 Voluntary Turnover

Voluntary turnover refers to a separation initiated by the individual, often when the
organization would prefer that the person stay as a member e.g. through resignations.
Voluntary turnover can be minimized by measuring and monitoring employee levels of
satisfaction with aspects of the job and the organization, and then addressing any problems
identified by such surveys to enhance job satisfaction.
Individuals exiting through voluntary turnover need to follow the procedures e.g. giving notice
of resignation as specified in the terms of service to avoid penalties.

9.5 Termination Interview

Dismissing an employee is one of the most difficult tasks a manager faces at work. Studies
have revealed that dismissals lead to stress and even heart attacks to the affected employees.
Furthermore, the dismissed employee, even if forewarned many times, may still react with
disbelief or even violence. Thus effect dismissal should involve an interview. Guidelines for

56
the termination interview are as follows:
i. Plan the interview carefully. This includes the following:
- Make sure the employee keeps the appointment time.
- Allow sufficient time for the interview, say 10 minutes.
- Use a neutral site, not your own office.
- Have employee agreements and release announcements prepared in advance.
- Have phone numbers ready for medical or security emergencies.
ii. Get to the point
As soon as the employee enters, give the person a moment to get comfortable and then inform
him or her of your decision.
iii. Describe the situation
Briefly explain why the person is let go. For example, low production. Stress the situation and
emphasize that the decision is final and irrevocable.
iv. Listen
To the extent practical, continue the interview for several minutes until the person seems to be
talking freely and reasonably calmly about the termination and the support package including
severance pay.
v. Review all elements of the severance package.
Briefly describe severance payments, benefits, access to office support people, and how
references will be handled.
vi. Identify the next step
The terminated employee may be disoriented and unsure what to do next. Explain where the
employee should go upon leaving the interview. It is often best to have someone escort him or
her until the person is out the door.

9.6 Exit Interview

Many employers conduct exit interviews with employees who are leaving the firm for any
reason. These are interviews, usually conducted by a human resource professional just prior to
the employee leaving; they elicit information about the job or employer with the aim of giving
employers insights into what is right or wrong about their companies. The assumption is that
because the employee is leaving, he or she will be candid. However, the information you get
may be questionable. Exit interview questions include: why did you join the company? Was
the job presented correctly and honestly? Why are you leaving the company? What
circumstances would have prevented your departure? What did you like most about your job?
What did you like most about your job? What did you think of your supervisor on the
following points- consistency, recognition, complaint resolution, feedback on performance etc.
Exit interviews can reveal useful information which can be useful to take steps to correct any
misperception for those who stay with the company.

Topic Summary
We have come to the end of Topic Nine. In this topic, we learned that employee separation can
either be involuntary or voluntary. Involuntary turnover which is initiated by the organization
can result due to dismissals, retirement and ill health. Voluntary turnover refers to a separation
initiated by the individual, often when the organization would prefer that the person stay as a
member e.g. through resignations.

Glossary
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Exit interviews- Interviews with employees who are leaving the firm, conducted for the
purpose of obtaining information about the job or related matters, to give the employer insight
about the company.
Involuntary turnover- This is a separation initiated by the organization, often when the
individual would prefer to stay as a member of the organization.
Termination interview- The in which an employee is informed of the fact that he or she has
been dismissed.
Voluntary turnover- Refers to a separation initiated by the individual, often when the
organization would prefer that the person stay as a member

TOPIC ACTIVITIES

Activity
Using suitable examples, discuss how voluntary turnover can be minimized in organizations.
Assignment

i. Distinguish between voluntary and involuntary turnover.

ii. Discuss how voluntary turnover can be minimized in organizations.

iii. Discuss how you would handle employee dismissal ensuring fairness.

TOPIC TEN
LABOUR RELATIONS

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Introduction
Welcome to Topic Ten. This is our last topic of the course. In topic nine, we studied employee
separation. In this topic, we will study labour relations. Good labour relations are important for
harmony and good flow of work in organizations. Hence, we will study the nature of labour
relations, importance of good labour relations and how it can be achieved in organizations.

Learning Outcomes
By the end of this topic you should be able to:
i. Describe labour relations.
ii. Discuss the importance of good labour relations.
ii. Discuss how good labour relations can be enhanced in organizations.

Topic Content
10.1 Nature of Labour Relations
The term labour relations is used to refer to the relationship existing between the employer and
the employee. Where there is a willing cooperation emanating from the employer and
employees in achieving the organizational goals, there is good labour relations. The scope of
labour relations comprises three major areas:
- Relations between managers and individual employees.
- The collective relations between employers and labour union (trade unions).
- The role of government in the regulation of these relationships.
There are many causes of good and poor labour relations.

10.2 Good Labour Relations

Every organization would like to enjoy good labour relations to avoid labour unrests such as
strikes, go-slows and picketing. One major challenge is how to introduce conditions for good
labour relations in organizations. Some of the conditions necessary for establishing and
maintaining good labour relations include:
- Recognition by the employer that the workers are part of a team working towards
common goals.
- A positive attitude on the part of the employees towards the organization and
management.
- Fair redress of the employees’ grievances such as those concerning working conditions
and employees’ rights.
- Payment of fair wages and salaries and adequate payment structures.
- Establishment of good working conditions.
- Establishing proper communication channels.
10.3 Poor Labour Relationships
Generally, both the employers and trade unions contribute towards poor labour relations which
result in inefficiency and labour unrests. Causes of poor labour relations include: indiscipline,
unhealthy working conditions, lack of human relations on the part of supervisors, an intolerant
attitude toward employees, inadequate pay structure, desire on the part of workers for higher
pay and other benefits, heavy workloads, unfair labour practices like victimization and undue
dismissals. Since consequences of poor labour relations e.g. strikes and picketing may affect
employee productivity and even disrupt activities resulting to losses, all the parties should

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strive to achieve good labour relations.

Note: A strike is a withdrawal of labour; and picketing refers to having employees carry signs
announcing their concerns near the employer’s place of business. Picketing is one of the first
activities to occur during a strike.

The recognized procedure/approach in Kenya and in many other countries of creating good
labour relations is the collective bargaining agreement (CBA).

Source: http://www.macleans.ca/general/hard-times-coming-for-canadian-labour-relations/

10.4 Collective Bargaining Agreement

A bargain is an agreement of at least two persons or groups of persons. A collective bargain is
an agreement made by or on behalf of a group or groups. In labour relations management, a
collective bargain is therefore the method by which an agreement is reached between the
employees’ representatives (trade unions) and the employer(s). Most of the labour –
management conflicts are settled through collective bargaining. It entails negotiation between
unions and management aimed at settling disputes before they can turn into conflicts and
labour unrests. It is a continuous process because it does not end once a bargain is agreed on. It
is reviewed from time to time as circumstances may warrant.

Before negotiations begin, management and trade unions determine their objectives for the
period of time to be covered by the agreement (say 2 years). Negotiations are supposed to
result in a solution. But when solutions are not found, the parties are supposed to submit
disputes to mediation or arbitration. Mediation is an attempt to settle conflicts through an
impartial third party. Mediators may be professional people who are acceptable to both parties
(trade union and management).

Arbitration is different from mediation in that the arbitrator has the powers to make binding
decisions. Arbitration is the process by which a grievance/dispute is resolved by an impartial
third party by hearing all the facts pertaining to it and recommends a solution for both parties.
It is commonly used to settle disagreements arising from administration of the labour
agreement (CBA). Provisions covering arbitration are usually spelt out in the labour
agreement. The provisions generally describe the issues that may be arbitrated on.

There are three methods of arbitration: conciliation, voluntary arbitration and compulsory
arbitration. Conciliation is a method of solving labour conflicts with the help of third party,
who intervenes upon the request by either or both parties. The third party (conciliator) simply
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assists in the negotiations and decision-making. Conciliation is a form of arbitration, the
conciliator plays a passive and indirect role. On the other hand, voluntary conciliation happens
when the trade union and management agree to refer any unresolved issue(s) to arbitrator.

Compulsory arbitration is also done through third party. However, in this case a third party
forces the trade union and management to submit to arbitration. This kind of arbitration is
provided for by labour laws. At times public officials (the Ministry of Labour for Kenya) use
compulsory arbitration in the national interest. The process of collective bargaining must for
its success be supported by multiplicity of factors such as a mutual recognition.

In all cases, the arbitration decision is referred to as the award. The award is accompanied by a
written review of the case in support of it. The written review is as important as the award
itself- it provides a rationale for the decision. Unlike decisions in a court of law, awards are
supposed to be reached on the basis of facts rather precedents of previous cases.

10.5 Employment and Labour Relations Court

The Employment and Labour Relations Court formerly the Industrial Court of Kenya is
established under the Trade Disputes Act. Cap. 234 of the Laws of Kenya. The main objective
was and still is the settlement of trade disputes which have not been settled between the
employer and employees. The court is empowered to make awards to the aggrieved party or
parties. The award is final and there is no provision for appeal and the decisions are binding.
When making decisions the court takes into consideration the national economic conditions,
the financial position of the employer(s) and the existing collective bargaining agreement
(CBA).
Normally cases are referred to the Employment and Labour Relations Court, once the parties
have failed to reach an agreement. Presentation of a case to the court involves the employer
represented by the Federation of Kenya Employers (FKE), the employee(s) represented by the
union and the Court judge presiding the arbitration. The procedures are different from those
found in the courts of law, although order must be maintained. Some of the matters that are
settled through the Court are wrongful dismissal which leads to reinstatement, wage and salary
disputes, redundancy and any other disputes unresolved by voluntary negotiating machinery so
long as they are within existing CBA. In this respect, the Court acts as a bridge between the
employer and employees in settling disputes and thus ensures that industrial peace prevails in
the country.

10.6 Trade Unions

A trade union is an organization of employees who have joined together so as to try to improve
their working conditions and protect their interests. Trade unions in general are concerned with
their members’ welfare and organization policies. They depend on the members’ participation.

Formation of trade unions has been as a result of economic, political and social strife. Early
trade union activities in Kenya were twofold: to improve wages and working conditions and to
use the movement for the struggle for independence. It was not easy during the colonial days
to distinguish trade union leaders and the freedom activists. We can therefore, say that the
trade union movement in Kenya and Africa in general is as old as the struggle for
independence for two reasons: 1. The workers were oppressed- working conditions and wages
were very poor; 2. The employer and the government were more less the same and were
foreigners. As independence approached, numerous trade unions emerged.

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Like other organizations, trade unions have objectives in line with their operations. While
there are many types and sizes of trade unions, trade unions are formed with the following
objectives:
i. To secure for their members fairer wages in the light of the cost of living and the prevailing
standards of living.
ii. To improve their members’ working conditions by securing shorter working hours, better
working facilities, adequate social security benefits, appropriate educational facilities and other
welfare benefits.
iii. To ensure the worker a share in the increased profitability of an industrial unit by providing
him with better terms or by payment of adequate bonus.
iv. To protect workers’ interest and more specifically to avoid their exploitations.
v. To ensure the workers’ security of employment by resisting retrenchment and victimisation
likely to harm them.

Given the roles trade unions play to their members, workers in various industries have formed
trade unions such as Kenya National Union of Teachers (KNUT), Dock Workers Union and
Kenya Union of Domestic Hotels, Educational Institutions, Hospitals and Allied Workers
(KUDHEIHA).The various trade unions in Kenya are affiliated to the Central Organization of
Trade Unions (COTU). In turn, COTU is a member of the Organization of African Trade
Unions Unity (OATUU) as well as the International Labour Organization (ILO).

10.7 Federation of Kenya Employers (FKE)

The FKE was registered in 1959 as the national umbrella body of employers and the most
representative employers’ organization in Kenya.

The principal objectives of FKE are to:

i. Promote good industrial relations between employers and trade unions.
ii. Encourage fair labour practices among employers.
iii. Provide a forum for consultation between and amongst workers.
iv. Collect, collate and circulate information and statistics and advise members on their rights
and obligations on employment matters.
v. Initiate, promote and support legislative measures which are likely to benefit employers’
interests and
vi. Present, advocate and defend the interests of employers generally.

FKE membership is open to employers both in the private and public sectors except civil
service. It is the only recognised representative of employers by the Kenya Government. FKE
is a member of ILO, International Organization of Employers (IOE).
Topic Summary
Congratulations! We have come to the end of the last topic of our course. In this topic, we
learned that labour relations is concerned with the relationship between the employer and the
employee. Good labour relations is important to avoid labour unrests, disruption of work and
inefficiency. Good labour relations can be enhanced by employer and employees working as a
team working towards common goals. Positive attitude on the part of the employees towards
the organization and management, fair redress of the employees’ grievances by management,
payment of fair wages and salaries, establishment of good working conditions and establishing
proper communication channels.
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Glossary
Labour relations- Refers to the relationship existing between the employer and the employee.
Collective bargaining agreement- A collective bargain is an agreement made by or on behalf
of a group or groups.
Mediation- Mediation is an attempt to settle conflicts through an impartial third party.
Arbitration- Arbitration is the process by which a grievance/dispute is resolved by an
impartial third party by hearing all the facts pertaining to it and recommends a solution for
both parties.

TOPIC ACTIVITIES

Activity
Using suitable examples, discuss the causes of poor labour relations in Kenya.

Assignment
i. Distinguish between mediation and arbitration.
ii. Discuss the consequences of poor labour relations.
iii. Discuss how good labour relations can be enhanced in organizations.

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